Starting a new business can be a very rewarding experience. Not only do you have the opportunity to be your own boss, but you have the potential to pursue something that you are truly passionate about. That said, starting a new business can be a risky venture.
Though people have long claimed that over 50% of businesses fail within their first year or two, things aren’t quite that dire. Still, the odds are against you in the long run. According the Bureau of Labor Statistics, 20% of new businesses fail within their first two years, 45% fail within five years, and 65% close their doors within 10 years of operations.
That shouldn’t stop you from starting a business, but rather, it should motivate you to be intentional and strategic in everything you do. At Link-Hellmuth, we’ve handled the insurance needs of countless startup businesses in the Springfield, Ohio area. Through the years, we’ve seen firsthand the obstacles they face as we’ve helped them prepare for what’s ahead.
Though there are no true guarantees in the business world, we’ve found a number of ways to effectively reduce risk when starting a business that you can greatly improve your chances of succeeding in the long run.
Create a Plan
Despite what some people might try to tell you, business plans are proven to increase your chances of success. Just by creating a business plan, you are two times more likely to start a business in the first place. Once you’ve started, they can help your business grow 30% faster.
A business plan isn’t a school report filled with theoretical ideas and a bunch of filler words. It’s a roadmap for your business that guides you. It forces you to realistically look at what you’re doing, how you’ll make money doing it, and where you’re going next.
No matter how clear of an idea you think you have in your head, a business plan will force you to take a deeper look at your overall model and strategy, opening your eyes to factors you may have otherwise missed.
Keep it Simple
People who start businesses tend to dream big. While this is great in theory, it can quickly prove problematic for a startup. A business that tries to grow too fast or starts off trying to do too much will almost certainly fail. When first beginning, it’s best to break down your business into its most simple form.
When it comes to starting a business, it’s much better to be great at one thing than average at five things. Once you have your initial model working, be slow and cautious with growth. This is where a business plan can help guide you.
Some people cringe when they hear the word “networking”. We don’t blame them. It’s been turned into this concept of paying to go to large events filled with people who are just trying to hand out business cards and get leads.
However, proper relationships building is very beneficial to a startup.
It’s not just about building relationships with people who might bring you sales. It’s about connecting with people who might be able assist you, compliment your services, or even mentor you. Having a few experienced business owners in your corner can be very helpful as you’re trying to figure things out.
Don’t Quit Your Day Job
At least, don’t quit it right away. The idea of leaving your 9-5 and starting your own business is often glamourized. However, for many people, it’s simply not a healthy choice. If possible, hold onto your current job while you plan out your business and get it off the ground. This provides you with stability, allowing you to grow naturally and avoid unnecessary risks.
Make Sure You’re Properly Insured
One lawsuit or unfortunate incident is all it takes to bring a business down. Depending on the structure of your company, those costs could pass on to your personal finances, causing long-term damage to your credit and wealth. A quality business insurance policy can help protect you from whatever might come your way.
Whether you’re operating your business out of your home, you’re renting an office, or you’re buying a building, your business needs insurance coverage that meets your specific situation. We can help with that. Link-Hellmuth can create a customized business insurance policy that checks all of the necessary boxes for your start-up. We work with all major insurance providers, so you get the policy you need at the best price possible.
Contact us today, and let us help you reduce the risk of starting a business.