This is kind of a trick title.
The reason I used “first year” is because that’s what most people search for regarding this topic.
It reminds me of how people (myself included) often ask for advice. We ask things like, “What’s the one thing…”. In reality, for almost any situation, it’s never “one thing”. We know that. We just wish that it was one thing so we ask the question that way.
In terms of starting a small business, the first year is usually tough. Getting through it is usually no a picnic. In fact, the first several years of business aren’t easy. And the more experience I gain and the more I read about current and past businesses and entrepreneurs, the more I realize a big reality…
Business is about survival all the time.
But that’s okay. If you think about it, life in general is that way. We’re all surviving. For as long as we can. Which really isn’t that long in the grand scheme of things.
Based on experience, as well as observing others and reading about many people in business, there are some things you can do to survive. Especially in the first year. But they can also be good lessons to take forward as well because there will always be challenges to overcome.
There is a trap out there for just about any business, at any stage, to fall into. But it seems especially tricky for startups and early stage small businesses.
Spending money doesn’t mean you’re in business.
It’s easy to spend money on just about anything. We encounter it in our personal lives. We also encounter it in business.
Websites. Employees. Advertisement. Marketing. Software. All kinds of things.
Is some of it necessary? It can seem that way. It can seem like it’s all necessary.
I think some of us use spending as a way to procrastinate from really growing the business. We say things like, “I just need to tweak the website a little more before releasing the product…” or “I just need one more coat of paint in the store before opening the doors…”.
To get through the first year: SELL. Focus on getting customers. The product doesn’t have to be perfect. You can fine tune it along the way. You don’t need advertising. You don’t need a website.
You need customers.
2. Fine Tune & Invest In The Operations
Operations are probably the biggest cost in any business. It’s everything that goes into creating the thing that you’re selling. Employees. Supply chains. Sales channels. Everything.
These take time to develop. While you’re selling in the first year you’ll likely be working on a somewhat thin margin. But even if you have a good margin you’ll still want to be looking for ways to increase it. Lowering costs. Making everything more efficient. Building for greater sales reach.
David Geffen, music industry giant, was great with operations. He built multiple record labels and was one of the best at building the operations. He knew that the artists were critical. But he also knew that when he or his team signed an artist that it was his job to have an operation that could maximize the reach of that artist.
As a result, the Eagles were one of the best-selling bands of all time. Later, bands like Guns N’ Roses and Nirvana reached worldwide audiences because Geffen’s operations were so efficient and so vast.
You obviously need a great product. But operations are just as important.
3. Product: Focus & Improvement
The most successful people almost always have a growth mindset. They’re always looking to improve. For business owners and managers they’re usually looking to improve themselves and also the products they’re selling.
Sam Walton, founder of Walmart, was very focused on merchandise. He was always looking for the best for his customers. He rarely had sacred cows. If a new product came along that was a better value, he would put it on the shelves. It didn’t matter what it replaced.
You probably have a great product. It’s why you’re starting a business. But don’t assume that it’s the best it can be. Take the mindset that you always need to improve it.
4. Mini Experiments
Your business is brand new. You probably have a priority list of things to do. Ways to market. Ways to sell. Ways to change the operations.
The reality, though, is that you can’t do them all full out right away. But don’t brush them aside. Try to give a big push to one or two priorities. For the rest, try to implement little experiments.
Maybe your main marketing effort for now is building local connections and word of mouth. But a little experiment might be posting one photo daily on Instagram. Another might be uploading one video a month to YouTube.
These little experiments are important. Do them consistently. In a way that doesn’t take up too much time. Do them for the foreseeable future. Then in a year or even multiple years, look at how the experiments are doing.
You’ll usually find that one or two are doing very well. Once your company is established you can then invest fully in those that show the most promise because you’ll have the data to back up the investment.
5. The Big Customer Trap
Another big trap for new businesses is getting a big customer. I’ve seen multiple small businesses have to shut the doors because the majority of their revenue comes from one giant customer. And if that customer ever decides to leave, which happens often, the company has to close down or drastically cut costs.
Sometimes it’s necessary to take on a big customer. You might not have a business otherwise.
But some of the most successful businesses of all time took things slow. They turned down seemingly big opportunities because they didn’t want to strain the operations. They didn’t want a customer dictating things.
Southwest Airlines is a great example. They limited the number of new airports they would enter even when they had seemingly endless offers.
6. Ignore Outside Chatter
When you’re working in the early stages of the business it’s easy to hear the jeers. You’ll tell someone that you’re opening a business and they’ll say, “I could never do that…”.
I’ve found that when you’re in your first days of a business that you hear these comments even though there really aren’t that many of them. You feel vulnerable. You feel unsure. So you amplify the negative.
Stay in your own little world when you’re running your business. It’s the only way to keep yourself sane.
One thing that helps is to watch how you talk about your company. Obviously you want to promote and sell. But be very careful about talking about what is coming in the future. What you think is coming often doesn’t. This leads to awkward conversations in the future. It’s like a studio talking up a big movie that hasn’t started filming only to see that film shelved for any number of reasons. The studio is left looking foolish.
Don’t promote until something is available to buy.
The Big Secret…
There isn’t one. The businesses that survive have owners and operators that don’t quit. That seems to be one of the biggest secrets to most things in life whether it’s business or just plain survival and happiness. Those that last the longest usually find what they’re looking for in the end.
And if not? Who cares? Humans are designed to work toward something. If we’re not working toward something our bodies begin to decay. Often in business it’s not the end that offers the reward. It’s the work.
That’s a big secret that you’ll find with many successful and old people. One thing they almost universally wish they had was the opportunity to do it all over again. To start at zero and build their way back up.