According to the Bureau of Labor and Statistics, a staggering 45% of new businesses fail within five years. There are many reasons for this including bad timing, the wrong product, unfit management, or a combination of all three. If your company is meant to fail, don’t let it be due to something you can control. Instead, take care of the basics and see it blossom. Here are four ways to do it:
The Importance of Location
When you and your family are looking for a place to live, there are two options to choose from. The first one is to rent, either long or short-term. The second and often a better one is to buy. Even if you don’t have enough money to buy the property outright, you can still do your research and apply for a mortgage from a reputable vendor.
There are many benefits to this. First, you will always have a place you call home. Second, most residential properties tend to increase in value over time. Finally, a house is a source of cash, one you might need on a rainy day. The key is finding the right location both in terms of price and convenience.
The same goes for new businesses. If you want your enterprise to flourish, you should select a place that markets itself. Many times, new companies, especially those in retail, fail. One of the most common reasons is a bad location, one that nobody can find or isn’t cost-effective.
Handling Legal Issues
When it comes to your business, there are many legal entities under which you can register it. The most common are sole proprietorship, partnerships, and corporations. If you are only one individual, the decision is pretty straightforward. You should select a sole proprietorship.
Yet, things get a bit more complicated when others are involved. You might be working with another person but under different levels of ownership. Another case would be a joint venture with a larger corporation. Once again, ownership, as well as profit percentages, should be clear from the start.
Aside from what kind of business you have from a legal standpoint, another important issue to consider is contractual agreements. Your employees need contracts, as do your customers, albeit different ones. As such, remember to hire the services of a labor attorney or employment expert who can help you draft the right contracts for the right people. The last thing you want is avoidable mistakes stemming from lack of research and carelessness.
Take Care of Your Accounting
Perhaps you remember parts of your accounting class from the university, and terms like profit, loss, assets, and liabilities might ring a bell. Still, if you are not fully confident about your knowledge of numbers and proper accounting business practices, find somebody who is. Keep in mind that when the IRS comes knocking at your door, not knowing the law will not be a valid excuse for breaking it.
For a small business or any business for that matter, the proper handling of financial data is imperative to success. A company can have a one-of-a-kind idea that blows everyone’s mind. But if sales of a product or service are not accounted for in the right way, it will without a doubt falter.
The same is true for taxes. As always, there is plenty to consider. Besides income and property taxes, based on the specific industry and market, your firm might also have to pay estimated taxes, employment taxes, and even excise taxes in instances involving commodities.
So, get your accounting right and be as detailed about figures as you can. Not only will you learn more in the long-run but also you will keep your business afloat and thriving.
Hire the Right People
Microsoft founder Bill Gates once said, “The key for us, number one, has always been hiring very smart people.” Great leaders know what they can and cannot do. Steve Jobs was well aware of his limitations as a programmer. Nevertheless, he developed arguably the best computer and electronics company in the world.
If you want your business to succeed, have the patience to wait for the right people to come. Don’t let the proverbial needle in the haystack slip away because you were too busy hiring someone else. Evaluate the members of your team and do it constantly.
The perfect recruitment system doesn’t exist. No matter what kind of educational background or experience a candidate has, this will not guarantee anything. But that doesn’t mean you should be lazy about the process. Rather, show how smart you truly are by hiring people who are smarter than you and can make the organization grow.
When starting a new business, four crucial factors all entrepreneurs must consider are finding the right location, taking care of legal issues before they become problems, being careful and detailed about the accounting, and finding the right people.
By doing this, they will find themselves on the right path to success.