How to Succeed in Business Your First Year

Taking the leap into entrepreneurship can be scary. There's a lot to manage and learn and you've spent a lot of time and money to open the business without a guarantee of success: approximately 20% of businesses fail in their first year,1 and half of businesses fail by the five year mark.

But some of these failures could likely be avoided with intentional effort and focus on some key activities during your first year in business. Here are some things you should plan to do during the first 12 months.

Fine-tune your business plan

Before starting your business, you should spend time crafting a business plan. A business plan is your written road map to starting and growing your business. But a business plan isn't something you should write once and never touch again. As you work through challenges and successes during your first year of business, use these learnings to reassess your business plan — and fine-tune it so it can help you make better decisions as you grow.

Test out marketing tactics

Getting your product or service in front of customers who are willing and ready to buy from you takes time and effort. When you created your business plan, you should have included a marketing plan.2 Now that your business doors are open, it's time to see what works and what doesn't.

Plan to spend this year tracking your marketing efforts, including how much you're spending and what the results were. That knowledge will help you craft even better marketing plans for future years.

Create separate financial accounts

From day one, it's important to treat your business like a business. That means opening and maintaining a separate business checking account as well as a separate business credit card. Yes, you may need to use some of your personal funds to start your business, but you shouldn't pay business expenses from your personal account and vice versa. Not only will this help when it comes to bookkeeping, but it's also essential to keep things separate from a tax and legal perspective.

Save for the unexpected

During your first year of business, things will likely be a little tight. As your business starts to earn money, don't consider this an opportunity to take a bigger paycheck. Instead, set money aside in your business for unexpected expenses that will undoubtedly pop up. Even if you're only able to put aside a little, make it a priority. You may need it to buy more equipment, make an emergency trip, or to cover bills as business ebbs and flows.