How to Financially Survive the First Year of your Small Business
Maria Peloponisiou~ 4 min Reading time | 15. Feb 2019
Starting a small business isn’t for the faint of heart; as any small business owner will tell you, there are a lot of ups and downs and unexpected challenges involved. There are, however, ways to prevent major setbacks in the first year of your small business when you’re just getting off the ground. Below are a few ways you can give yourself the best possible start as an entrepreneur:
1) Start Your First Year with a Business Plan
Of course, there will be things ahead that you couldn’t possibly foresee, but having a business plan will at least give you a road map for the first 12 months of operation. With a little research, you’ll be able to know what a realistic timeline would be to launch your company, develop a client base, and begin to see profit. Go without one, and you won’t have a way to gauge whether you’re on target or not. Business plans are necessary if you need investors or loans, but even if you don’t, they can give you the peace of mind that comes with the knowledge that starting a new business takes time.
2) Open a Business Bank Account
Starting a business requires an initial cash investment to get the ball rolling. If you open a business account and put the investment in it, you’ll have a clear picture of how much you can afford to spend on getting the business up and running. Keeping your personal and business accounts separate means that you’ll be more likely to hesitate to withdraw money from your business account until you know you are turning a profit. It will also help keep you realistic about incurring new expenses as your business grows, since eventually you’ll need to start paying yourself.
3) Start Bookkeeping Right Away
Keeping track of your finances goes hand in hand with having a business plan; one is useless without the other. If you get to know your financial reports and keep track of the profitability of your business on a monthly basis right from your first year on, you’ll be able to see more clearly when things are improving and when things are going south. Businesses often need more than a year to start turning a profit, and if you’re keeping track of your finances and see an upward trend, it will give you the confidence to keep going where a less financially savvy person might pack it in too soon.
4) Start Marketing as Soon as You Can
After you’ve developed your product, decided on your service, set up your website, or done any other necessary steps to make your business functional, it’s time to start marketing. The type of marketing you will need to do will likely depend on the type of business you own, but things like content marketing, online ads, a Google or Yelp business profile, or business social media pages are all good things to consider once it’s time to get the word out there. You may not have time for all of these at once, but picking at least a few and sticking with them are good ways to introduce your product or service to the rest of the world.
5) Make an Effort to Grow Your Network
Keep track of industry events in your area so you can get to know people in the same field. Networking can seem like a dirty word to those who don’t like the idea of being fake, but you don’t have to be. It’s just about showing up and having a genuine interest in connecting with other like-minded people in your industry; even if you don’t make lucrative business connections right away, you’ll meet other people you can relate to in your field of work. Going your own way professionally can be challenging because it’s lonely, so reaching out is not only good for your profit margins, but your mental health as well.
6) Get the Right Digital Tools
In addition to online marketing, you’ll likely want a program like Billomat that lets you keep track of your finances, and possibly programs like Google Analytics to monitor your website traffic. If you work on a variety of projects, you might want a timesheet app that helps you keep track of the time you spend on them, or a program like Shopify if you have an ecommerce site. You can also streamline some of your digital tools if you need to – for example, Billomat can interface with Shopify and Google Drive so you can create invoices for purchases automatically and save them to your Drive. This way, much of the administrative legwork is done for you so you can focus on things that matter.
While the first year of your small business can often be rough and full of uncertainty, making sure you have a business plan and the tools to measure your success against that plan will help you feel like you’re steering the ship. If things are slow, using your down time to market yourself, network, and find the right digital tools will help you gain traction instead of spinning your wheels trying to regroup. Finally, having a good idea of where you’re headed will help you make the most informed decisions you can, in order to do what’s best for your business and for yourself.