Make your business a success in Year 1

Set your new business up for success

With thousands of small business owners opening their doors each year, entrepreneurship is alive and well. Unfortunately, not all of these businesses will make it to the one year mark. Here are some tips to help make sure your business starts – and stays – on the right track. 

Small business is big business in BC, according data from Statistics Canada. Up to 98% of all businesses in BC are classified as small businesses. Many are micro-businesses with five employees or less, and more than half operate as one-person shows.

But the first year of any business operation is often the hardest. Here’s what you can do to give yourself an advantage during this crucial time so that you’re lifting 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 their 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. And get a good understanding on whether or not keeping prices steady will help increase your volume and revenue.

Polish up your credit rating

As the expression goes, "dig a well before you're thirsty". The best time to secure adequate credit is before you need it – after that, it can be more difficult. Talk to your business advisor.

Use credit to preserve working capital

It's best 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 necessary acquisitions.

Take on only what you can deliver

Know your strengths and play to them. 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 generally linked to doing what you do best.

Consider outsourcing or – as difficult as it may be – decline a contract that exceeds your skillset. 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, such as a new process or product, can be protected by a patent.

You should also consider protecting your brand with a registered trademark on words, logos, product and service names, slogans, and more. This gives you exclusive rights and protects against competitors infringing on your work. 

Securing 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 can confuse your customers. The value of a distinctive trademarked brand can become so great that you can use it to bargain for financing with lenders 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 (or have it changed for you) many times over. You’re learning as you go, so be willing to reassess your plan and pivot when necessary.

It's always a good idea 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 plan?

There are many paths that lead to success and many things you’ll learn along the way, so don’t feel confined to only doing things the way you initially thought or planned. Your stable of expert advisors, including a business banking advisor, can help you find the right path.

Bonus tip: 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 devoted to get that initial sale. So it’s worth it to invest in these relationships by going above and beyond to exceed expectations. If you do, they’ll not only become repeat customers, but they can also be excellent sources of referrals.

People trust their friends’ and acquaintances’ opinions more than any advertising campaign. And testimonials on social media or review sites like Yelp or Google continue to gain traction and influence over customers.

In many industries, referrals can produce the bulk of new clients and customers. How can you develop a formalized referral system or secure glowing reviews that help grow your client or customer base?

And of course, before getting started on any new business venture, make sure to talk to a business banking advisor. They have the insights and connections to help you make the right decisions and start off with a solid plan for managing your business’ money.