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Seven tips to make your business a success in year one

With thousands of small business owners opening their doors each year, small business is clearly on the rise. But unfortunately not all of these businesses will last long beyond that one year mark.

Small business is big in BC according to the most recent data from Statistics Canada. Up to 98 per cent of all businesses in BC are small businesses with over half without employees and 47% with fewer than 50 employees. Most of these are micro-businesses with fewer than five employees.

With thousands of small business owners opening their doors each year, small business is clearly on the rise. But unfortunately not all of these businesses will last long beyond that one year mark.

The first year of any business is typically the hardest. Here’s what you can do to give yourself an advantage during this pivotal time so that you’re toasting a glass of champagne on your business’ first year anniversary.

Know your numbers and manage your cash flow

Businesses prosper or perish based on how the finances are managed or mismanaged. Keep a handle on costs at all times to see where you can trim and where you'll have to make changes if cash flow should tighten.

Monitor your receivables and stay on top of overdue payments. If you have suppliers, try to match your payment terms with theirs so cash comes in as payments go out. At the same time, see if there's a gap between what you're charging and what the market is prepared to pay. Or whether keeping prices steady will help increase volume and revenue.

Polish up your credit rating

A wise man once said, "Dig a well before you're thirsty." Do you have access to adequate credit? The time to secure it is before you need it. Talk to your business advisor.

Use debt to preserve working capital

It's important to avoid using capital to pay up-front for long-term fixed assets, such as equipment. Your business advisor can help you determine whether leasing may be the better alternative. If buying makes sense, for example to purchase additional inventory, you may be better off using debt to finance these acquisitions.

Leverage your marketing efforts

Building your list of clients, customers and even trusted suppliers isn’t easy. It takes effective marketing with time and resources to get that initial sale. So it’s worth it to invest in these relationships by going above and beyond to exceed their expectations. If you do, they’ll not only become repeat customers, but will be excellent sources of referrals.

People trust their friends and even acquaintances’ opinions more than the best advertising. In many industries, referrals can produce the lion’s share of your clients and customers. How can you develop a formalized referral system to help grow your client or customer base for your business?

Take on only what you can deliver

Accepting a contract you know you'll have trouble completing could potentially do more damage than good if you don't deliver as promised. Also, avoid moving outside your core competency. Profitability is linked to doing what you do best.

Consider outsourcing or - as difficult as it may be, by declining a contract that exceeds your skill set. This way, you’ll maintain your valuable business reputation and relationships both in year one and for the years that follow.

Protect your intellectual property

Did you or your business come up with a valuable innovation? An invention or particular visual feature, such as an industrial design can be protected by a patent.

You may also consider protecting your brand with a registered trademark on words, logos, product and service names, slogans and more. This gives you exclusive rights. Protecting your brand and the products and services it stands for is critical to your future sales.

If you don’t protect your trademark, a competitor could use it or something similar, which could confuse your customers. This value of a distinctive brand that’s trademarked can become so great that you can use it to bargain for financing with credit unions, banks and other lending institutions later on.

Your business plan: review, revise, repeat

It’s important to start with a plan so you know what you need to do next. But in your first year especially, you’ll likely change your mind many times over. You’re learning as you go, so be willing to reassess your plan and pivot when necessary.

It's always good to go back and look at your original business goals. Are you on track? Do you need to revise them? What information do you have now that you didn’t when you first wrote your business plan?

Don’t fall into the trap of feeling confined to only doing things the way you initially planned. Remember, there are many paths that lead to success. Your stable of expert advisors, including a financial business advisor, can be very helpful in that regard.

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This article is provided as a general source of information and should not be considered personal financial or investment advice or solicitation. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete.

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