The first year in running a business is crucial -- it determines where your company is heading, and can either make or break your success.
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Many entrepreneurs fail to make it through that first year, and give up on the business overall.
Here are some great tips and advice that will get you through that first year, and prepare for many more to come.
Why Is the First Year So Crucial?
During the first year of running a business, entrepreneurs spend most of their startup money.
There are many bills to pay, and not enough profit to compensate for them yet. It also takes time to build up market and loyalty.
Success does not happen overnight, and it is normal for everything to happen at a slow pace.
Many entrepreneurs tend to run out of money quickly because they are not pacing themselves in growing the business. Building a consumer base takes time, so it is important to monitor spending money so you are on the same track as your business.
Common Problems Faced During the First Year
One of the most common problems an entrepreneur faces during the first year is falling behind on payroll taxes or failing to budget for taxes on business income. Once you run into tax problems, it is difficult to get back on track.
As such, your business model needs to budget for taxes and your profits need to be rich enough to pay those taxes and still yield enough cash flow to make all of your efforts worthwhile.
Another problem is entrepreneurs having too high expectations during the first year. It is highly unlikely that the business will become highly successful that soon .
As we have mentioned, building a business takes time. Rome wasn't built in a day, and the same is true of most businesses.
Your business will probably not make a significant amount of money during that year, so instead concentrate on building a foundation. It is important to avoid spending money you are probably not going to have.
Treat every dollar as precious and spend your money wisely, only when there is going to be a good return on the investment.
Learning During the First Year
Although entrepreneurs run into many problems during the first year, it does have its perks.
This is your chance to get to know your product, get to know your market, and get good employees. It will take time to become familiar with your product, so take advantage of this time because you need to know your product better than anybody else does.
It is also important to get to know your target market, because it is possible you may have the wrong one. If you realize that you do have the wrong market soon enough, you will have plenty of time to test out different markets to find the right one.
During your first year, you will become familiar with employees as well as potential ones, so you can pick out the best workers for your business. This is your chance concentrate on putting together a great staff who can work well together in bringing success to your company.
Don't Throw Good Money After Bad
Remember that failure is not that bad. Although no entrepreneur likes to fail, it's better to fail than to stay in business and continually lose money.
After the first year, if things are not going well, ask yourself why things are not working out and what can be done to fix those issues. Put a plan in place to resolve those problems and then track your progress towards achieving your business goals.
Don't ever give up easily, but, at the same time, be realistic.