Starting a new business can be one of the most rewarding experiences of your life. And with the right preparation, you can increase your chances for success and build a business that lasts well into the future.
According to government data, Americans are starting new businesses at a greater rate than they have in over ten years1. And while entering into a new venture may be exciting for those involved, starting a business – in a pandemic or otherwise – is no easy feat.
For those who are considering launching a new business, it’s important to take the following key considerations into account to guarantee that you are set up for success and financially ready to let your business thrive.
Many small businesses fail during their inception years because of a few obstacles that could have easily been addressed at the outset – and these obstacles will always be the same, whether you’re starting a business during a pandemic or in more “normal” times. New business owners should aim to be more forward-looking and anticipate these hurdles by thinking about the three S’s of success:
Based on the above, you know the business concept you’re hoping to achieve – but how exactly will you execute on the model you’ve laid out? One thing to consider if the type of business exists already is opening a franchise instead of completely starting from scratch.
Especially in our current climate, franchises have the potential to be more likely to survive amidst uncertainty. One of the many benefits of a franchise is the brand already exists so a lot of the heavy lifting of branding and marketing is already established. Additionally, with an existing brand typically comes training programs for business leaders and employees to help set you up for success. And lastly, think about the amount of ongoing support you’ll have in a franchise from their corporate team for things like strategy, operations, branded collateral, and the like.
Most people leave their careers and start new businesses out of the excitement of what’s to come, but it’s important to not underestimate how much work and investment it takes to see positive results. First, and most importantly, prepare for long work days with any new business because they require extra attention. That said, be ready to eat, sleep, and breathe your business in the early years – even if that means quitting other jobs to dedicate your full time and attention to your new endeavor.
And as previously mentioned, having the right support is essential. To do so, find a business partner whose skills complement yours so you can spend more time doing what you do best while they take the reins in other areas. For example, if you are more technical or finance-savvy, consider a partner who is more creative. If you’re lucky enough to partner with a spouse or family member, perhaps put a structure in place where one is handling the business day-to-day full time and the other(s) can maintain part time jobs aside from your business to keep the cash flow coming in.
Finally, no matter how large or small your business is, establish a group of advisors or a board of directors to ensure you’re surrounded with expert opinions from different perspectives. The board can be as large/small or formal/informal as you want; the ultimate point is that you have other viewpoints and backgrounds to guide your business.
It’s critical to partner with the right financial entities, including a bank you trust. If you’re planning to take out loans to support your new business, make sure to do your research and find a bank that is steeped in small business/startup experience. Since ideally, they’re going to be your partner for years, make sure to interview your lender. Ask questions like: How many of these loans have you originated? Are you an SBA-preferred lender? What are your specialties?
Depending on your type of business, it’s important to prioritize banks and other financial partners who bring more added value to the table to support your end-to-end business strategy – whether they offer expertise in a particular vertical or leasing/managing vehicle fleets to make things easier in the long run.
When meeting with any potential financial partners, be prepared on your end by bringing all personal financials, tax returns, and other important documents. To ensure you have everything you need, reference the Small Business Administration’s checklist for any small business loans here.
Starting a new business in any industry at any time is difficult – but these days, every new business venture comes with additional and unique challenges. So, when it comes to partnering with the best financial institutions, small business lending from a trusted provider like The Bancorp is your best bet.