Starting a business requires equal amounts of careful research, intuitive understanding of markets and precise numbers crunching. These three facets can carry startup companies through the tentative early years and into solid establishment. Entrepreneurs must keep a clear eye on the problems that beset many startups and how to resolve them.
Business Startup Basics
Entrepreneurs must do considerable advance work before launching their business idea to the public. They must research the market, study competition, determine the best legal structure for the business, secure business licenses, get insurance, find sources for products and decide how best to reach customers. All this must happen before or along with finding retail properties or manufacturing space, hiring employees and notifying the public of your existence. All these measures often incur considerable cost, and merchant capital funding is often required.
Frequently, the major problems that beset a business startup occur after they have been in operation for a while and have seen successful growth. This phenomenon can occur when the company begins to see around one million dollars in sales per year. These companies may not have the organizational systems in place to carry them through this critical point in business, when they must start to behave like a larger business. Common problems that often plague startups are having a sole founder that tries to do too much on his own, having a marginal market niche, failing to organize the structure of the business properly for best accountability, starting with too little money and spending too much money to launch the business.
Recognizing and quickly dealing with these problems makes the difference between a startup that succeeds and one that fails. Smart entrepreneurs know that flexibility and adaptability are the hallmark of businesses that succeed over the long term. They can quickly institute new methods of marketing, employee training, organizational accountability and funding to accommodate a changing marketplace. In particular, proper funding is critical to the success of startup businesses. There can be unforeseen circumstances that can quickly deplete initial capital. The period in between launching the business and waiting for revenue to begin to come in can be a critical period for finances. Problems with manufacturing, equipment or supplies can also put significant dents in working capital.
Although unexpected expenses can cause significant problems for businesses, good entrepreneurs know that having reliable sources for additional funding on hand can minimize the impact. Expenses can quickly get out of hand without the business owner being aware of it. The owner should institute systems of monitoring expenses either himself or by a staff member who can sound the alarm when these ballooning expenses begin to threaten the bottom line. An expected sales slump, for whatever reason, can also make a dent in the financial health of the company. Uncontrollable events such as natural disasters can cause business income to suddenly run off the rails. Successful entrepreneurs line up merchant capital funding before it is needed, so that financial adjustments can be made easily and at the best rate of interest.
Here is some more information about finding funding for small business.
Kent Yuen is a writer for JW Surety Bonds, the largest surety agency in the country specializing in performance bonds and construction bonds. For more information on different types of surety bonds, click here. In his spare time, Kent can be found spending time with his family and mastering the art of controlling a soccer ball.