The second year sees about 30 per cent of businesses shutting down and, during the two to five-year stretch, about 20 per cent cease to exist.
Whatever the result in the first 12 months, best first-year practices will set up small businesses for future success and help them power through the initial three-year barrier.
Even the well-publicised billion-dollar sale of Instagram to Facebook was a story that glossed over initial struggles and hard work. Creator Kevin Systrom wrote his first unsuccessful photo-sharing application, Photobox, eight years ago. His second failed attempt came a few years later with Burbn. In contrast, Instagram took eight weeks to build, had 25,000 users in one day, 200,000 in seven days and a million devotees after 90 days.
So with the most runaway successes still proving the first few years of any business are the hardest, how can everyday businesses get on track for instant results?
One Australian success story is specialist environmental consulting company Bennelongia. Formed five years ago, the firm undertakes surveys for clients such as BHP Billiton and Rio Tinto. Bennelongia now has the leading laboratory in its field, employs 15 staff and has seen growth of around 30 per cent each year.
Applicable to almost any business model, Bennelongia Director Mike Scanlon says five factors have helped contribute to the company’s success:
1. Identifying a market
There’s no point reinventing the wheel. If you identify a gap in the market, be it a product or service, then the opportunity arises to create something new and exciting.
2. Experience and reputation
If you’ve identified your gap, you need to provide some experience and reputation to follow through. It’s a very competitive market and reputation is everything.
3. Working hard and leading by example
Always provide a premium product on time and on budget while being willing to do that little bit extra for your clients. New business owners should be excited by the idea of arriving first in the morning and being the last to leave at the end of the day. If you are prepared to do the most menial task yourself, others will follow your lead.
4. Maintaining relationships
Establishing and maintaining good client relationships is paramount for present and future business growth. Remember the names and histories of clients and customers. Where relevant, be attentive to personal details including which sporting teams people support. If you remember people, they will notice and, in turn, remember you when new services are required.
5. Investing in good staff
Employ qualified and capable people and ensure their value is reflected in their pay. If you provide an enjoyable and friendly workplace with ongoing mentoring, training and personal development, both the individual and the company will benefit. Most importantly, be flexible and provide a balance for your employees’ work, family and social lives.
New business owners and entrepreneurs should be set for the hard work of pursuing their current ideas while ready for navigating new day-to-day activities. Taking a lead from those who have balance and growth will improve the potential of the business.
This article represents the views of the author only and not those of American Express.
Peter Wood is a freelance journalist with over 8 years experience writing for areas such as banking, finance, real estate, advertising and marketing more. Peter has contributed to regular columns in newspapers, business magazines and online, advising on issues such as business growth, cash flow management, investments and loans, credit control and more.