The Keys to a Successful Startup

Regardless of the type of business that you create, there are a few general rules that will help you to build it to success. Unfortunately, none of them are magic pills, but all of them will help to keep you on the path.

Have Staying Power.

Many businesses fail simply because they do not have enough money to get through the initial start up period. Although every entrepreneur hopes that their business will be a gigantic success on its first day of operation, odds are that this will not happen. Although your capital needs can vary depending on the type of business, you should have enough money to operate at a loss for at least 12 months, and preferably 18 months. This will give you the opportunity to build a clientele.

Write a Business Plan.

Business plans do not need to be hundred-page monstrosities which you never read. A business plan can be a page or two, but it should define goals in the short, medium and long term. Get input from people that you can trust, and keep it handy.

Your Business Is Business Development.

No matter what business you are starting, your primary job is to get out there and find clients. Growing your business is a matter of growing your customer base, so if you are constantly selling your services, you are growing your business.

Focus on Cashflow.

Although profits are nice and losses are bad, the reality is that startups typically live and die on cashflow. If you have a hefty accounting profit due to large numbers of receivables and due to the fact that all of the money that you spent today on equipment only hits your statement over the next five or ten years there is a good chance that you are also out of money and cannot keep the lights on. Aggressively manage your receivables and watch your expenditures.

Don't Spend Unnecessary Money.

Every dollar that you spend, even though it may only cost 50 to 70 cents after taxes, is still a dollar that is gone. With this in mind, ensure that every penny that you spend will have a clear return on investment. You do not need shiny new furniture when a used desk from Craigslist will do. A twenty-cent Bic pen will put ink on paper just like a three dollar roller ball. Being frugal will allow you to either take more profit home or spend money where it will truly grow your business.

Aggressively manage your receivables and watch your expenditures

by Answers.com Author, Business Services writer