US small businesses are booming. The Census Bureau reported 1.7 new business filings in 2022. That’s up over 28% from 2019 pre-pandemic levels.
5.1 million new business applications included non-employing enterprises.
I published a book with Seth Levine two years ago. The New Builders, about the future generation of American entrepreneurs. Women and minorities are more likely to own service, retail, and restaurant enterprises.
Small business owners now face cash shortages and a competitive landscape dominated by giant enterprises. Today, you can test your ideas online for a few thousand dollars, making business startups cheaper. New funding and aid are available.
The New Builders and other small business owners share seven tips for startup success.
Start small, but aim big.
Fewer than 15% of startups can get bank loans or venture capital, so revenue growth is likely. Start small and price your products high enough to reinvest in the firm. That implies starting small and using savings. However, envision your company’s growth. If you imagine yourself in three to five years running a firm with five or 10 workers and several locations, you will be more inclined to create a plan to get there.
Don’t bet everything on one concept or your business.
In business, tenacity or “going all in” is a humorous myth. Pivoting is more important than perseverance. Drop a bad concept. In his senior years, Alexandria, Va., entrepreneur Fred Sachs was making organic flour for restaurants and bakeries.
“Sometimes you have to create a solution to a particular problem; and in other situations you have to innovate to get around a particular hurdle,” Sachs remarked. If you don’t solve the problem, you’ll fall behind. Keep changing.”
Avoid personal debt.
Get a bank loan first. Business bank loans are hard to get since banks won’t lend to a company unless it can prove it can pay back the loan (community development finance institutions, which are nonprofits, are easier).
Entrepreneurs sometimes borrow against their assets. In today’s volatile economy, borrowing against your home or credit card is risky. Avoid startup loans. Before borrowing, ensure your company has clients, sales, and profits. Bootstrap, pitch, and find funds.
Customers are your best guide.
Remember that entrepreneurship is frequently a service industry. You help clients and customers. Change if they don’t buy.
Avoid marketing waste.
Testing the market in the early stages of your firm is a good use of time and money. Test the market, not marketing.
Promote your product or service at the lowest cost. If you’re testing a product on Amazon, Etsy, or Instagram, remember that they often charge hidden fees and may raise them without notice. Explore different ways to reach customers. Smaller, niche, or locally owned tech platforms are challenging big ones.
Marketing can begin once you create a viable business strategy.
- Create a company bank account.
Hire a bookkeeper. Unless you love and are good at bookkeeping, hire a bookkeeper or an online one for a few hundred dollars a month. Do this ASAP. It aids tax preparation.
- Check your bank accounts, pay bills, and issue bills at least once a month.
Does your city have a DoorDash or retail platform?
Accounting and finance platforms for small businesses
Understand funding options.
Starting with savings and friends and family capital is best and cheapest. Community development finance institutions (find yours here) and nonprofit lenders can give small loans or working capital. Community banks, which advise small businesses, are your best bet for bank loans once you have income and profits. In Shoe Dog, Nike creator Phil Knight describes the benefits of walking across the street to approach a lender for financing.
Entrepreneurs tell similar tales.
Venture capital exclusively backs fast-growing companies with five-year revenue models in the millions. Additionally, only well-connected people can get venture capital. Don’t bother unless you have a “in” or a tech-driven business plan.
TechStars, Camelback Ventures, Y Combinator, and Ad Astra Ventures can assist you pitch venture capitalists if you wish to establish a venture-backed model. EforAll helps entrepreneurs find financing.
Get free info.
Influencers and other marketers give paid insights and training. First check the free information.
SCORE is a terrific resource.
Verizon and the Association of Women’s company Centers offer a free digital tool training session for small company entrepreneurs.
Check local colleges and institutions’ resources.
The Small Business Development Center at Buffalo State University helped Rebecca Brady, founder of Buffalo, N.Y.-based Top Seedz, develop her cracker company. She hired a shared kitchen and sold at farmer’s markets with $5,000 of her own money. She hopes to make $4.5 million this year, four years later. Her advice?
Look ahead, not back. Focus on your goals and stay on track.