A business’s first year is critical and challenging. According to experienced entrepreneur, Ross Buhrdorf, here’s what you need to know to survive your first year in business.
1. Forget about perfection and focus on finding your customers
The number one reason entrepreneurs fail is that they don’t have customers who want to buy their product or service. With that in mind, your first year should be about finding communities of people who want to buy what you’re selling — or even just part of what you’re selling.
As you do, don’t assume that you need to create the perfect product or service before you locate your customer base. That will only hinder your momentum.
Once you locate your customers, you are in a strong starting position and you can turn to fine-tuning from there.
2. Control your cash
Another reason that companies fail early on is that they run out of money, so managing your monthly cash flow and expenses is crucial during this window. Of course, the two go hand-in-hand: You want to be able to survive long enough to discover customers.
To set yourself up for viability, adopt a highly conservative approach. Start by implementing a good cash-flow management system to track the money going in and out and make sure you understand the difference between cash flow and profit.
Part of being conservative is also making calculated decisions — meaning, don’t overhire until you determine how you’re going to locate your customer base, make money and be attractive to investors. Keeping a sharp eye on all of this is essential to opening up growth opportunities.
3. Stay calm and take the next right step
During the first year of founding a new company, there is always some reason to panic or have an existential crisis. Maybe your new product turns out not to have the take rate you expected, or someone who you feel is critical to the team quits, or you miss your revenue numbers because of an unexpected expense, or unforeseen competition enters the market — the list can feel endless.
All of these scenarios are serious, but rest assured that they are typical and can be navigated gracefully. The solution is often just to stay calm, listen to your instincts and do the next right thing. If you do that, the path forward will start to reveal itself.
By deploying these tactics, entrepreneurs can navigate some of the more common challenges that will surely arise during the first — and arguably the toughest — year while staying focused on what matters most for success.