How To Improve Your Already Good Chances Of Launching A Start-up
by Tom Cleveland
The latest small business success rates may be a surprise to those that have held fast to negative "rules-of-thumb" from many decades ago.For over 10 years the team size needed to launched a start-up has become smaller and smaller
Start-ups today have a 70% survival rate for their first two years and 50% success for their first five years.
These figures appear on the SBA.gov website and are a far cry from the conventional wisdom that 90% of new enterprises never make it past their first year and that only 5% make it to year five.
Although success rates appear better today, they do not mean that starting a new business is any easier. Technology has improved the chances of success. But hard work is still the necessary ingredient for any new successful endeavor.
Government statistics taken from two different survey methods also display a trend that has evolved after the successful 1990's. This trend prevails today. It relates to the size of new start-ups, measured by number of employees, as the diagram below indicates.
The quarterly data show a decline in the size of new business ventures from an average of 6 down to 4 employees per venture. So, the general takeaway here is that technology has reduced the need to hire more labor before launching a new business. Entrepreneurs have learned the benefit of outsourcing many tasks to scale their enterprises quickly.
What guidance and advice should a budding entrepreneur take from all of this?
You Can Do More With Less, But You Still Need Working Capital
Long before you rush out to apply for a small business loan
, you need to spend a healthy amount of time preparing and planning your new venture.
There are always better ways to do things. In the past, a small businessman had to be a jack of all trades
, so to speak. He needed to understand the intricacies of finance and accounting, along with possessing innate talents in purchasing, sales, marketing, production and hiring plus managing employees.Success figures are better today since managers at cash-trapped start-ups can now outsource a host of activities that heretofore were impossible to delegate affordably. And all they have to do is pay for a service, rather than hire a full headcount.
Here are some examples:
- Accounting and bookkeeping services are no longer an impossible task to do at an economical price. QuickBooks from Intuit makes keeping your books a much simpler task, especially when augmented by oversight from a CPA, who can also help with small business loan applications.
- Having room where to archive your documents is no longer a space hog issue. Many software programs, like DocumentMall and Digitech's ImageSilo, provide organized ways to scan and file your records for easy retrieval and backup under an affordable monthly service charge.
- Most desktop copiers allow you to scan your documents back to your computer, and cheap flash drives also provide ample capacity for digital storage needs.
- Website design and support comes in a variety of options from free do-it-yourself tools like Wordpress to custom design services at reasonable costs. It is easier and less expensive today to outsource your IT support needs to a local vendor, sparing you the upfront cost of having a full-time staffer devoted to this purpose. Why not get expert skills only when you need it?
Today you can sell online and make sales anytime of day, every day of the week, year round. Setting up shop today is easier than ever. But not everything is plum simple.
Setting up payment methods, for example, can be tricky when it comes to charge-backs and fraud protection. Shopping-cart software is not always easy to install. This is where having the right resources pays off. It is best to do your work right where money is the concern.This is where it makes sense to have the appropriate working capital and funding to pay for the best, thus improving your already good chances of succeeding in your new venture
Tom Cleveland is editor at Business Funding Experts, a 5-year Florida-based finance company specializing in merchant cash advance provisioning and fast cash for small businesses, making available to new businesses up to $500,000 in as little as 3 days with no application, broker or other up-front fees and with minimal paperwork. The company determines the amount that a business qualifies for an advance based on credit card sales rather than collateral, assets or a high credit score.