When discussing the incidence of startup failure, analysts who follow the small business sector tend to quote two statistics: 90 percent and 60 percent. The former statistic is derived from the presumption that about 9 in 10 small business owners abandon their enterprises within the first 5 years. The latter comes from a longitudinal study conducted by Cambridge Associates from 2001 to 2016. The 90 percent rate is attributed to tech startups in very competitive spaces that are vying for the attention of venture capital investors. However, the reality of 60 percent of businesses failing within 5 years may still sound disconcerting to entrepreneurs.
What prospective startup entrepreneurs need to keep in mind is that they have little room to make mistakes in today’s highly competitive and unforgiving business climate. To this effect, here are four recommendations to avoid becoming a statistic.
1. Seek the Advice of Mentors
Connections will always be of extreme importance to business owners. During networking sessions, entrepreneurs should look for seasoned and successful individuals who have the potential of becoming mentors. Business owners should not assume that only paid consultants will agree to become mentors. In many cases, seasoned entrepreneurs are on the lookout for new ideas and future opportunities. Mentors know opportunities for investment or partnerships are always just around the corner.
2. Recognize the Value of Human Capital
When a staff member emerges as a leader or a key operational figure, business owners should take notice and do everything possible in terms of retention. Many entrepreneurs do not think about worst-case scenarios of losing their key associates, which can be a serious mistake. Failing to recognize the intrinsic value of human capital can be a ticket to small business oblivion.
3. Double-Check the Essentials
One issue with startups is that they can often be too creative for their own good. Let’s say an entrepreneur wants to develop a new type of mobile casino where players can win meals and beverages at trendy restaurants. This is the kind of project that requires a substantial amount of creative focus from the company principals, which could make them forget about the basics. When business owners act as company managers, they should make it a point to double-check basics such as intellectual property protection, payroll, fixed costs, and commercial insurance in Chula Vista. Forgetting to account for these hard expenses can easily derail a company.
4. Keep Good Company Records
From tracking company expenses to drafting operational manuals, entrepreneurs should document everything related to running their business. This information should be organized and easily accessible in case it needs to be presented to prospective investors, accountants, attorneys, or regulators. With cloud-based and mobile solutions such as Wave, Quickbooks, and Zoho, entrepreneurs should have no issues in terms of bookkeeping. Recording other types of information can be accomplished with solutions as simple as Evernote and Slack.
No matter what your business is, get in touch with American Tri-Star to find out what type of commercial insurance is best for your company’s needs. We are also a leading provider of auto, health, bond, and property insurance in Chula Vista. Call one of our knowledgeable agents today at 619-827-0522 for a complimentary quote.