How to Have a Great First Year with Your Small Business

You just launched a small business and are excited for the year ahead — as you should be! You wouldn’t start a new venture if you didn’t have high hopes for success.

Running a new business can be exhilarating and exhausting all at once. Almost every new business owner will face challenges, make mistakes, and wonder if they have what it takes to make it through the first year.

Guess what? You do have what it takes. Stay the course, be open to learning, and don’t let the bad days get the best of you. The first year may be one of the toughest, but we’re here to help you succeed.

In this article, we’ll share some essential tips for how to have a great first year as a new small business owner.

Some of the Most Common Challenges for Small Business Owners in the First Year

Before we dive in, it’s important to know some of the challenges that may pop up in the coming year. While every small business is unique, there are some common hurdles that many business owners face when they first start out.

Cash flow is one of the top challenges for many new businesses, especially small ones. According to the small business support organization, SCORE, and a U.S. bank study, 82% of businesses fail due to poor cash management. When there’s a lack of funds, it can wreak havoc on your business. Imagine being unable to pay for your inventory, rent, payroll, and more.

The good news is there are strategies you can implement now to avoid future cash flow problems. Being proactive is critical when it comes to any issue you may face. And you’ll likely have more than one issue in your first year.

Here are some of the top challenges small business owners may encounter:

• Supply Chain Disruption
• Customer Acquisition
• Balancing Quality and Business Growth
• Time Management
• Company Culture
• Customer Satisfaction
• Recruiting Employees
• Market Competition

Don’t let this list of potential problems discourage you. Instead, focus on what you can do now to prepare.

Start with a Plan

You already may have a business plan demonstrating that you’ve built your idea on a solid foundation. It may include your vision, unique value proposition, target market, financial strategy, and marketing plan. Having a plan doesn’t guarantee success, but it can help you stay focused.

If you don’t have a detailed business plan, don’t sweat it. Your plan doesn’t necessarily have to be an extensive document. Here’s a way to create a business plan to help guide your decisions as you launch and grow your business.

You also may consider crafting a mission statement articulating your business’s purpose. This sets the tone for your business and can be shared with your employees and customers so they may rally around your goals and values.

Get Cozy with Your Customer

As a new business owner, you may be focused on attracting customers and finding ways to keep them coming back. Loyal customers are a big win for small business owners because they provide a stable revenue stream, referrals, and proof that your business is viable.

Remember your mission statement? Loyal customers are the ones who believe in your business and understand your vision, so take some time to learn more about them.

When you get to know your customers, you’ll discover what matters to them. It may be personalized service, social responsibility, or discounts and promotions. When you know what makes your customers tick, you’ll have valuable insights that can help build and maintain customer loyalty.

Be Pragmatic and Flexible

According to the latest U.S. Bureau of Labor Statistics data, about 1 in 5 U.S. businesses fail within their first year. One reason they fail is because they refuse to pivot.

If you’re constantly struggling, it may be a sign that your business needs course correction. Maybe you’re in an oversaturated market or your product line isn’t quite right. Whatever the issue, don’t be afraid to consider pivoting. It can be difficult to let go of your original vision, but a flexible mindset may save you from a catastrophic first year.

As a business owner, you never know what’s around the next corner. An accident, property damage, or a lawsuit from an unhappy customer can cause a huge setback for your business. That’s why business insurance is critical. It helps protect your personal and business assets when the unexpected happens.

Play for the Long Run

Your first year in business will be over in a flash. Before you know it, you’ll be approaching your second year. Ensure you have your financial planning to account for future expenses.

A business savings account is an excellent way to prepare for unexpected costs. Ideally, your business should save at least 10% of your monthly profits or have enough cash on hand to cover several months’ expenses in an emergency.

Your savings account is a great way to fund a growth opportunity or purchase an essential business need, such as insurance. Paying for business insurance may seem like another expense you don’t want to deal with, but having a policy will pay off in the long run. The potential costs of accidents, injuries, and lawsuits could far outweigh the cost of an insurance policy.

Be Realistic About Profitability

You may be disappointed if you expect to make money in your first year. According to Forbes, most new businesses need 18 to 24 months to reach profitability. Even companies that turn a profit may lose it in their first year because they are investing money back into their business.

That said, some small businesses may profit more quickly. Online and home-based businesses with little or no startup costs (such as a freelance copywriter) can usually generate a profit quickly. It may be helpful to take a closer look at the factors that affect profitability and the strategies you can use to boost your business’s growth.

Be Kind to Yourself

You’ve worked hard to get where you are today. And yet, your work has just begun! Running a business may mean spending more time as a business owner and less time as a family member and friend. There’s nothing wrong with keeping your eye on the prize, but give yourself an occasional break to decompress and relax.

Sometimes you have to step away from your 80-hour work week, and that’s OK. Don’t be surprised if you return to work with renewed energy and a fresh perspective!

Peace of Mind with Insurance

Want to know another way to help minimize the daily stress of running a business? Get insurance. Business insurance can help safeguard your hard work and help provide peace of mind if something unexpected happens.

Whether it’s general liability, professional liability, or workers’ compensation, having the necessary coverage can help financially protect your business from various risks. If you’re unsure of your exact needs, we can help. Visit our state-based insurance hub to learn more about the coverage requirements in your state.

Simply Business can help you protect your new business with affordable insurance that fits your budget. We know you have a full plate, so we make it easy to find insurance. If you’re wondering how much a business policy might cost, check out our easy online quote tool.

You’ve Got This

Remember the scary statistic about failure? Let’s focus on the flip side. That means 75% of small businesses will survive their first year. And you can be one of them. You’ve put in the hard work and dedication, and now have new tools for a solid foundation. All signs point to a successful year ahead!