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4 Decisions You’ll Face In The First Year Of A New Business

Contributory

by | Jul 3, 2018

A good business owner needs a lot of qualities. You have to have good leadership skills so you can ensure that your employees trust you completely, you need to be financially savvy, you need to have the vision and creativity to come up with great products and you need to have good time management skills so you can deal with all of the responsibilities you have as a boss. On top of all of that, it’s vital that you have good decision making skills. The success of your business hinges on the decisions that you make. During your first year, you’ll come up against a lot of challenges and the way that you decide to handle them can make or break the company. These are the big decisions that you’ll have to make in your first year of running a new business.

The Name

The first thing you come up with is a good product, without that, you don’t have a business. The next thing to do is come up with a good name for the company. People often underestimate just how much impact the name has but if you think about it, all of the most successful companies in the world have a good name that rolls off the tongue and is instantly memorable. One of the most important things to consider is how it sounds when you say it out loud. Is it an enjoyable word or phrase to say or is it clumsy? Alliteration is a good trick to use; Coca-Cola, Paypal, Best Buy. Those are just a few of the massively successful companies that use it in their name.

You also need to make sure that it isn’t too long. A name that’s too long is hard to remember so people won’t be able to find you as easily. It’ll also make your website and email address a nightmare; having a good business email address is important because it’s often the main line of communication between you and your customers. They aren’t going to spend ages trying to remember a really long company name to find you so make it short and sweet. The same goes for your website address; it needs to be the same as your company name, otherwise, people will struggle to find you online.

Now that you’ve got a great name, you have to decide whether you’re going to register as a limited company or not. You can find the advantages and disadvantages of a Limited company here. One of the major reasons that people register as a limited company is that the finances of the business are separate from your own. That means your assets are protected if the business has large debts.

Pricing

The price that you put on your products is key to success; price too high and nobody will buy them, price too low and you won’t be able to afford to create a good product. What you need to decide is whether you’re aiming for a high quality product that people are willing to pay more for, or you’re trying to attract customers that want a cheap solution and are willing to sacrifice quality for it.

The first thing to do is look at your competitors and see how much they’re selling their products for. It might seem like undercutting them is the most logical thing to do but that isn’t always the case. It’s all good and well selling for less, but if you can’t afford to match their quality at that price, customers may be willing to pay a bit more money for a better product. As a general rule, you should undercut competitors where possible, but always make sure that you’re maintaining good quality.

Outsourcing Or Hiring

If you’ve created a great product at a reasonable price and given it a name that catches people’s attention, you should start to see some sales coming in. That means you’ll need more hands on deck to help you with the extra workload. Now comes your second major decision; do you hire people yourself or do you outsource? The bad news is, there’s no right answer here and it depends on the nature of your company. If the culture of your company is central to your marketing campaign (perhaps you’ve got a big focus on customer service or environmental issues, for example) it might be better to hire people in. You need to make sure that everybody involved with the company is on message and that’s harder to do if you’re outsourcing.

Companies in industries that are highly competitive may also be better off hiring their own people to avoid sensitive information being shared. If you’re outsourcing, you have less control over company data so there is a higher chance that your competitors will find out what you’re up to.

When it comes to outsourcing, it often depends on the department. Some things that are central to the company like sales and marketing are often better kept in-house. But areas like IT, where you’ll benefit from the experience and manpower that an outside company can offer should be outsourced. When you’re trying to protect yourself online, for example, it’ll cost you a lot of money to hire a team of the best IT experts and it’s usually cheaper to outsource it.

The cost of services overseas is a big factor as well; often, you can get things done a lot cheaper by outsourcing them to another country. Some business owners don’t like the idea of doing this and would rather work more locally which is fine, but when you’re starting a new company, cutting costs is vital. You could consider outsourcing abroad to start with and then finding local solutions further down the line when you’ve got more money to play with.

Expanding

If you’ve made it through the rest of those big decisions and you’re still going strong, you might start thinking about expanding the company. You can bring in more money if you have the capacity to make and sell more products but you’ve also got to consider the increased running costs. Moving into a larger office space, taking on more employees and expanding your manufacturing process is going to cost you a lot of money. If you can’t increase sales enough to cover those extra running costs, you’ll be in big trouble.

Finding the right time to expand is the key to making sure that you can keep the business going. When you’re seeing steady growth in sales, it’s tempting to think that you’ll maintain that growth so you should expand the business. The thing is, that growth may be temporary and you might find that sales drop off again after a couple of months. If you’ve already borrowed a load of money and put it into expanding the company and then sales start falling, you’ll have a hard time keeping your head above water. A good indication that you should expand is sustained sales increases over a long period. If you’re struggling to meet the demand of your customers and you’re running out of products on a regular basis, that’s a sign that it might be time to expand.

If you do decide that it’s the right thing to do, you should always be cautious. Don’t suddenly hire an office space ten times the size of your current one and bring in a load of new staff. Expand your operation gradually and make sure that you’re always bringing in enough money to cover the increase in running costs.

If you can make the right call when these decisions come up, your business will thrive and you’ll be in a good position to grow in the future.

xoxo, Karmen K

***This page may contain links from paying affiliates. That means if you buy using the links you’re helping me continue to provide free content for this blog. I only recommend products & services I use and love. BT-dubs this is my affiliate disclaimer, cool?

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Karmen Kendrick Design Studio helps women entrepreneurs launch beautiful brands and strategic websites that attract, engage, and convert leads into bonafide clients.

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