Simple Ways To Make Money In The First Year Of Your Startup
Speak to any business expert, and the chances are that they’ll tell you that there’s no way you can start making money in your first year of business. After all, even the most successful companies take an average of 30 months to become profitable (or ten years where Amazon was concerned), with the first year most definitely ruled out as a time of building things up rather than reaping their rewards.
For business owners with a bright idea but no capital on which to run at a loss, this reality is often the most significant obstacle to success. That’s a problem, and it’s a belief that’s not necessarily formed on factual footing.
Of course, that’s not to say that making money in your first year of operations isn’t difficult – it most definitely is. That said, there are ways to see some money coming back to you in that crucial twelve-month period, and we’re going to consider them here.
Keep borrowing to a minimum
With average business loans currently resting at a cool rate of $663,000, it’s fair to say that borrowing is big business in this field, especially when it comes to startups looking for the capital to get them off the ground. In fact, with even home-based franchises costing as much as $5,000 just to get started in a basic sense, many people would assume that getting going here without the help of a bank loan is a sure way to ruin a business before it’s begun. Unfortunately, it’s this reliance on lending that means many businesses have to pull a higher income to pay that debt and welcome profits at long last. A process which, as the figures directly show, often takes as much as a year or more.
Of course, in theory, borrowing that allows you to get started is better than not borrowing at all. That said, taking steps to limit that amount, either by saving your own capital, seeking investment early on, or even just cutting operational costs through home-based offices, carefully-sourced supplies, etc. can all help you to minimise those repayment terms. That way, you should hopefully be able to clear that debt within months of starting, thus pulling a profit far sooner than you could dream of doing otherwise.
Hit the bullseye with targeted marketing
The first year of business is often about trial and error, with any income generally going straight back into experimental marketing focuses. Realistically, though, with tools like Google Analytics and social media now providing a free and fast way to understand who’s interacting and where, there’s far less need to spend excessive amounts of money or time throwing blind shots here.
Instead, paying small amounts for web presence, and even dedicating time to the building of invaluable social media audiences, means that you should be able to gain a far clearer idea of target audience far earlier on. Then, it should be possible to target marketing that hits the bullseye, and provides a much higher return on investment (ROI) much sooner, at least some of which you’ll quickly be able to count towards those all-important first-year profits.
Don’t rule out a sale
It may seem unusual to consider selling a business so early on, but selling either percentage royalties to an investor, or selling to a large company that agrees to keep you on as acting manager, can be a great way to earn immediate profits without the need to repay and add interest. Obviously, this isn’t going to be for everyone, and it does require you to consider your overall intentions for this business, but this is an especially viable option for first-time entrepreneurs without the necessary know-how or resources to see things to success.
Of course, selling when your business is still in its budding stages can be easier said than done, but increasing ROI using the steps mentioned can help, as can pitching a great business plan, and a unique product that’s already proven itself at market (even if it isn’t making a profit just yet). Equally, making sure to dedicate your focus on viable investors in your field, or those already working with complementary products, can increase your chances of a sale that not only puts more money in your pocket but also provides the funding that your business ultimately needs to drive profits with a faster-turnaround.
First-year profits might be difficult to achieve, but they’re by no means the impossible goal they’re often made out to be. These tips can help you to prove it.
*This is a collaborative post.