Almost every business starts with a well-defined business plan and growth strategy, yet not all are able to achieve the expected success. Some of these are able to survive the competition and create a market presence while the remaining are either discontinued or fail. As per 2011-2012 statistics, 85 % of new businesses fail (close down) in the very first year of establishment while only 45 % are able to survive for more than 4 years. A point to note here is, not every business that closes operation is a failure. When an entrepreneur ceases its business operation, its called discontinuance. A discontinued business is classified failure only when there is loss to its creditors.
The emphasis here is not to highlight the reasons of failure of a new business but to present factors which, if considered well, can help a new business to achieve stabilization and success. These factors are divided into three broad categories to facilitate easy understanding and to avoid contemplating a long list of related components.
1. Management Planning
Along with a good business plan, relevant management and business expertise is essential to run a business. Often it is difficult for a new entrepreneur to have expertise in all relevant business areas like – financing, purchasing, production, sales, inventory management and personnel or employee management but this problem can be handled by contracting a business planning consultant. It is not always essential to hire a full-time consultant or contract a consulting company for high payments, considering the budget constraint for a new start-up, consulting a freelance business planning consultant as and when required can be a feasible option. These consultants can guide on areas like location preference, organizational design, personnel management, and expansion strategies and other management related problem which increase as the business evolves.
2. Sales and Marketing Planning
An effective way to access the market and reach the potential customer is through marketing and promotional efforts. A well laid advertising, promotional and personal selling campaigns and strategies are the surest way to create a market presence. Traditional marketing methods such as flyers, business cards are still significant contributors to any business. A right kind of marketing strategy promotes sales , manages market competition and thus ensures an initial success for a business. In long run, timing plays a vital role. It is essential to determine the most accurate time for market entry, product renovation or new product design.
3. Financial planning
Well planned and correctly defined financing sources can save a business from financial crises like under-capitalization A business that grows on permanent capital is more likely to succeed than the one that is seeking growth based on short-term capital. A sound financial planning takes into consideration, the fund-flow needed during stability and expansion.
Apart for the factors discussed above, a most crucial factor for success of an individual entrepreneur lies in setting realistic and rational business expectations. A very common reason of discontinuance of a business is the dissatisfaction of its owner. Dissatisfaction can arise from owner’s unrealistic expectations or his inability to deal with complex business problems. Business in itself is a great opportunity coupled with equally great risk. Running a business provides endless challenges and learning opportunities, the key to success is patience, hard work, careful planning, pro-activeness and adaptability.