The third day of the week is commonly known as “hump day”. Every hardworking individual breathes a sigh of relief once this day has passed and the weekend is within reach. According to Forbes, this is also true for businesses. The “hump year” – the third year in a business’ history – is a business’ moment of truth.
In the first year of a startup, the focus is on creativity, planning and how to bring ideas to life. In the second year, the focus shifts to making things run smoothly and ironing out any kinks. After spending the first two years really honing your product or service, the third year becomes the make or break year. It is during this “hump year” that it is necessary to step outside comfort zones and push for profitability and market acceptance.
To help your business reach success in its fourth year and beyond, consider the following tips:
Create scale – Developing scale, or failing to do so, will determine whether or not your business successfully pushes past the “hump year”. In the words of Forbes contributor, Billee Howard, “Don’t ever try to be all things to all people but do make your offering accessible to as many audiences as possible. Only through true scale can a business create the kind of depth required for long-term success.”
Be Patient – Success is almost never immediate, and it comes in many different forms. While your cash flow may be great, for example, you may have issues is liquidity. Success requires patience, and a dedication to shifting focus when necessary. When progress stalls, it may become necessary to grow new business offerings and diversifying the client base.
Spend money to make money – Because “hump year” often requires more marketing and promotional efforts, you’ll need to find a healthy balance between maintaining a positive cash flow and investing in your business. This may mean cutting back in different areas, including your own salary (if you’re the owner). In most situations, expansion, growth and development will require tapping into earned capital.
Crush comfort and complacency – If you want your business to achieve success in the long-term, there is no room for comfort zones. Change is vital. It is only when you push your company to new points of discomfort that it will discover new paths of growth and profitability.
Learn from missteps – If you’ve reached your third year in business, you likely have a list of missteps experienced along the way. In order to run a successful long-term enterprise, you must be flexible enough to learn from past mistakes. When necessary, the ability to switch to a Plan B instead of going with Plan A is imperative.
Thoroughly research funding options – Many businesses make the mistake of going with the first lending source that will work with them. Others, who fail to qualify with traditional lenders, turn to personal savings, family and even credit cards to fund their startups. If you’re in need of working capital, consider what a small business loan with an alternative lender – like First American Merchant – can do for your business in terms of both growth and expansion.