Roughly half of businesses in the United States fail within their first 5 years, often before they’ve had a chance to hit key business milestones.
Just half of the small businesses in the U.S. survive their first 5 years. And the half that don’t make it often fail before they’ve had a chance to hit key business milestones.
That’s an alarming statistic for any business owner, even if they’ve passed the 5-year threshold. What causes these businesses to fail?
Sometimes there are market trends that work against them. Some failed businesses can genuinely be chalked up to poor timing, unfortunate economic changes and a slew of other reasons that are outside of their control.
Yet the majority of businesses fail because of things they can control. A Gallup study of 4,000 entrepreneurs discovered that the reasons for a failed business usually boil down to the person who started the business. They then broke down the traits of successful business owners to provide evidence-based abilities and tactics you take action on right now.
Here, we’ve taken these entrepreneurial tactics and talents, and broken them down into 6 achievable business milestones to help keep you focused and on track.
Business Milestone #1: Profitable Business Model
A business model should tell the story of how your entire business works. The story should focus on 3 core questions:
- Who is your client?
- What does your client value?
- How do you deliver that value at the right cost?
All of these questions add up to creating a profitable business model. If you nail these questions, you’re well on your way.
Set aside some time to formally write a full-fledged business model. It’s the first and most important of all business milestones you must reach. Here’s one easy system for creating a rough business model, although there are endless ways for you to create your own. Your business model may evolve over time, but you’ll want to start with a clear plan for success.
Business Milestone #2: First Repeat Client
Your next business milestone involves that sweet, sweet exchange of currency. Landing your first repeat client (sometimes called an anchor client) will give you confidence in your business and the motivation you’ll need to keep going. The key word here is “repeat.”
You may earn that first repeat client through personal recommendations, an existing contact, or cold calling. Landing your second repeat client will take understanding exactly who they are and where they spend their time—both online and off.
Business Milestone #3: Realistic, Scalable Marketing Strategy
Marketing is the lifeblood of your business. Businesses owners who wait for clients to call are destined to fail. Smart marketing can actively bring in new business.
There was a time when businesses would hire a marketing firm to handle everything. While many still do this—and you can if you have the budget—it will benefit most entrepreneurs to tackle as much of the marketing as they can, and outsource once they know what works.
As an entrepreneur, taking an active role in your marketing campaign will strengthen two key “talents”: Delegation and determination. You’ll have to learn the new tools that make it all possible, and commit to regularly putting in time to market your business.
Once you understand the tools at your disposal, create a scalable marketing strategy around them. Scalable means that you can amplify the effect without amplifying the costs by the same degree.
Taking advantage of internet marketing techniques and working with the right people will help you create a marketing strategy that you will take to the bank.
Business Milestone #4: Hire and Train a Solid Team
Starting off as a one-person operation is great. However, with the exception of a few lucky business models, it will only get you so far.
You’ll need to hire and train a team. This exciting milestone will grow your business by leaps and bounds
Put in the time to create a stellar employee training program before you even hire your first employee. Instead of stumbling through it, and possibly wasting your time, energy and money with the wrong people, this will enable you to set up employees for success.
You can also test the waters by hiring a virtual assistant or a contractor. They can take a lot off your plate without being a formal team member.
A virtual assistant can help you establish that highly sought after work-life balance that all entrepreneurs need.
Business Milestone #5: Gain Authority in Your Industry
At this point, you’re making money and you have a great team in place. Your next milestone is to become an authority in your industry.
Even if your business doesn’t exist entirely online, the internet is your fastest route to becoming an authority. Create the type of content that your industry needs and will appreciate, and give it away for free. Your peers will see that you are knowledgeable, and over time, you’ll become an authority.
Get involved in local events that allow you to share your expertise. You may even wish to seek out speaking events and industry-wide conventions.
Coupling speaking engagements with stellar online content will turn you into a sought-after authority.
Business Milestone #6: Reach a Significant Number of Sales
If you’ve developed a profitable business model, created a scalable marketing strategy and found the perfect team, you’re on pace for lasting success. The final business milestone to reach is a significant number of sales.
Set a specific goal for sales. Without a goal, the business will stagnate. Having a goal will help you to continue moving toward your target growth.
Determine an ambitious, yet achievable, dollar figure for your business. Obviously, the numbers will vary depending on the nature of your business. Only you will know what number to set as your target, but once set, make sure everyone on your team knows about it. Make it something you strive for together.
You Can Be the Successful 50%
Your business can be among the 50% that makes it past its first 5 years, and then onward to 10 and 20. You’ll need to work on business milestones and goals to keep you and your team focused, but it’s possible.
Along the way, you’ll become confident, business-focused and a skilled promoter. All of which are essential skills for successful entrepreneurs.
This is an archived post from the FreshBooks Blog and was originally published in January, 2016.