Every entrepreneur starts a business with the primary objective being growth and success. However, many businesses fail during the first years of operation. Understanding why businesses fail is key to ensure you set strategic plans to stay afloat. According to statistics on Zippia, 21.9% of businesses fail during the first year of operation and 50% during the first five years of operation.
Cash flow problems, low market demand for product or service, and lack of talent are top reasons many small businesses fail. The good news is growing a successful small business is possible if you have an effective development plan in place. Note that business development is about implementing ideas, activities, and strategies that help you increase revenues and scale your business. Read on to learn a few business development tips that boost business growth.
Find Your Niche
The first step to successful business development and growth is finding your niche. It is, therefore, vital to pay attention to the skills and knowledge you possess. Then, determine how you can best use them to start a profitable business. When you focus your efforts on a small segment of the market, you can quickly determine ways to add value to clients.
For example, if you enjoy making personal hygiene products, identify a gap in the market where you can leverage your knowledge, then perhaps you could make organic bath soaps and sell them to eco-conscious customers. You should also evaluate your options and analyze your competition and market trends to identify a profitable business niche. For instance, let’s say you have experience in making pottery, but can’t afford to buy a pottery wheel. You can explore other feasible options, like teaching online if you have credentials in education.
Identify Your Ideal Customers
Once you’ve identified your niche, figure out who your customers are. This step is vital to ensuring your business development strategy succeeds. One of the best ways to know your ideal customers is by creating buyer personas or profiles. A buyer persona helps you understand the unique characteristics of your target customers, such as age, gender, occupation, interests, income, location, pain points, and social media usage. You can gather these details by conducting thorough market research. Take advantage of online surveys or hold one-on-one talks with prospects to get a clear picture of what they expect from brands.
Choose Your Business Structure Carefully
There are many considerations when developing a business, and the most crucial one is choosing a business structure or legal entity. When you incorporate your business legally, you get to know how much you pay in taxes, the level of liability to your assets, and your ability to access financial aid from banks and angel investors. Depending on your business nature and goals, you can form a sole proprietorship. This option is inexpensive, easy, and ideal for entrepreneurs who plan to run their business alone. However, you risk losing personal assets if your business fails or incurs debts.
As a small business owner, forming a limited liability corporation or LLC is an excellent step if you want to avoid taking personal liability for your business and protect your assets. To form an LLC, you’ll need the help of a legal team offered by registered agent services like ZenBusiness, LegalZoom, RocketLawyer, and IncFile. That’s because the process can be complex for anyone with little knowledge about business law. Before choosing a registered agent, legal experts recommend reading reviews of each company.
An honest ZenBusiness or LegalZoom LLC formation review shared online, for example, helps you understand the pros and cons of each registered agent’s services. That way, you can choose one that fits your business needs. Other examples of business structures you can explore are limited liability partnership, general partnership, and corporation (S Corp and B Corp).
Set High-level Goals
An important component of a successful business development plan is setting high-level and realistic goals. When you establish three to five goals and set deadlines, you prevent your company from delaying growth and success. Goals every entrepreneur should outline in their business development strategy include keeping existing customers, innovating new products and services, and entering new markets.
Given that customer acquisition costs five times more than keeping an existing buyer, focusing your efforts on customer retention can help save your business vast sums of cash. Not to mention, selling to existing customers guarantees a success rate of up to 70%. Innovation is also of utmost importance, as it helps your brand stand out from competitors. Therefore, create new and high-quality products within your niche to ensure you meet the ever-changing customer expectations.
Establishing and growing a small business is not a straightforward process, as many entrepreneurs assume. Every startup is likely to fail within the first five years of operation, so it’s important to have an effective development and growth strategy in place from the onset. For your business development and growth plan to succeed, find a profitable niche, know your target audience, choose a business structure, and set high-level goals you want to achieve.