Successful Start-Ups


The majority of small businesses take at least 2 to 3 years to become profitable and then go on to become truly successful once they’ve hit the 7 to 10 year mark. Clearly most small businesses take years to become successful, despite the apparent overnight success of companies like Facebook, Amazon and Uber to name a few. Statistics show that successful small businesses are built over years, not months, according to my research and experience.

In this article I’ll show you what to expect in terms of a time line to becoming better at business and ultimately building a successful business.

Small businesses have fairly predictable patterns of growth in their early years and for the most part they face similar challenges with both successes and failures. Unfortunately, the overnight success of businesses like Uber are the exception to the rule. It’s also important to note that success means different things to different owners and its important to understand what success means to you and your journey and how you will measure it.

Below, we’ll look at the first few years and what indicators of success a small business may find in each period.

First year;

Usually year one is full of financial struggles as you try to get your start up business up and running. There can be many small successes and rewarding experiences as well as the trials, tribulations and regular failures.

Owners can celebrate all the hallmarks of starting a new business like official registration, setting up a bank account, obtaining an overdraft (not an easy undertaking in today’s marketplace), launching a website or getting some P R attention. Establishing a client list and realising you can pay your bills thanks to your new business venture are amongst other exciting successes you can celebrate in your first year as a new business owner/entrepreneur – its essential that you celebrate each and every win too!.

But wait a minute, these initials successes aren’t necessarily signs your business will succeed over the next few years. However, it does mean that you’ve made a good start.

It’s important to note too that approximately 1 in 5 small businesses fail in their first year. So if you made it through year one, that’s a good enough reason to celebrate.

Second year;

Year two is when the initial successes of year one start to pale into significance against the troubling cash concerns. Your savings are probably spent, your credit cards may be maxed to their limit and owners will start to have to borrow more to fund new business or even existing debt, creating stress around increasing and mounting debt.

This is the year when reality sets in, when the glow of being a new business owner starts to diminish and when small business owners realize that their original customers aren’t necessarily long-term customers and that successfully starting a business isn’t the same as running a business that’s successful over a sustained period.

Success in year two becomes about hitting growth targets, even small ones and sustaining effort, commitment and focus. If your business is growing steadily you’re on the road to building a strong, viable company.

Year two is when you should see your client list really expanding and your reputation becoming more widely known.

Third year;

If you have targeted success at this point it may mean that is breaking even or making a small profit. That being said a fully profitable and sustainable business is most likely another two to three years in the distance. At this point in your journey, success may be accepting you have a great business idea or service and that you’re prepared to push on for the next couple of years to see it reach its potential.

Or, success might mean discovering that either your business isn’t sustainable or that you’re not willing to continue working at such a high pace and you know what, that’s okay. If closing your business is the best decision for you at that time then that’s just fine.

If you do choose to hang on in there, success in year three is definitely about fine tuning all areas of your business.

Work out what areas of your business you can impact growth, Think about recruiting a strong team, consider the risk factors, develop your leadership skills and delve deep into your financial numbers to see what products, services or clients are driving your business forward, where you can capitalise on that and where you can reduce costs.

Fourth year onwards;

It often takes years to become an overnight success!

An overnight success is usually a company that’s just being discovered after year four and occasionally as late as after 10 years. Many businesses that are called an overnight success have actually been around for about 10 years.

Instant success is nothing short of miraculous and not a general rule of thumb and small businesses shouldn’t look at them as models of growth. In fact down that path painful failure lies.

It’s more reasonable to expect lots of mistakes and tiny steps forward, something referred to by FORBES as Failing Forwards!

At year four and beyond, a small business can look for the following markers of success:

  • Stronger & Sharper brand positioning
  • More effective marketing
  • More effective management team
  • A defined process of customer acquisition
  • Stronger product/service development
  • Stronger profit margins
  • Establishing and Figuring out exactly what customers actually want

Successful Business Examples;

Walmart is a classic example of how a small business typically grows and becomes successful.

Walmart was started in 1945 by Sam Walton but it took seven years for him to open a second store. Rapid growth took another 25 years, until 1970 in fact. It’s now the world’s biggest retailer. Walmart’s story shows that slow growth is completely normal—even successful companies take a long time to get things right.

Mail Chimp is another example. Mail Chimp helps small businesses with their marketing. They’re most famous for their newsletter platform. They were founded in 2001 and through slow and steady growth they pulled over $400 million in revenue by 2016.

It was a hard path to success, according to the popular news media of the time. There were many competitors in that space, ones with more funding too. Mailchimp succeeded because they were a small business and took time to learn and understand what their customers wanted. They then worked quickly adding customizations and new features, all while charging less than their competition.

How Long Does It Take to Start a Small Business?

You can start a small business in under three hours and although the common perception is that starting a small business is difficult, the administrative and legal tasks required can actually be done quite quickly. That being said, these tasks don’t include some of the deeper work you’ll need to do like finding funding or writing a business or marketing plan.

How Long Does It Take to Build a Business?

Building the fundamentals of a small business can take about a year but most small businesses take at least 2 -3 years to reach predictable profitability. It’s also important to note that about 75 percent of start ups survive their first year, 69 percent survive the first two years but approximately only half reach five years.

Building a long-term successful business relies on a number of survival characteristics and if I listed them, they would definitely include;

  • Determination
  • Focus
  • Capacity for hard work
  • Ability to self-motivate
  • A willingness to accept you was wrong
  • A willingness to ask for help when needed

How Do I Build a Successful Business?

Building a successful start-up relies on working hard and moving quickly whilst being prepared/aware that success can take years.

Here are some additional tips a small business owner can use to build a successful business:

1. Write a business plan; Even if you’re not applying for a loan, writing a business plan will help you in the future by identifying your market and their needs as well as a profitability time frame. It will also help serve as a constant reminder as to what you are trying to achieve.

2. Limit spending; Many small businesses fail thanks to cash flow issues. Spend money on what you absolutely need, not on what your competitors or you would like to have. Think clearly, what benefits can I create by spending more money!

3. Pay your business not yourself; Any profits you make initially should go into marketing or anything else your company needs to create awareness and more opportunities. Pay yourself later.

4. Be selective; Only spend time on what moves your business forward and say no to any opportunities (like marketing ideas) that don’t stimulate growth.

5. The customer comes first; Do lots of market research and make sure your service or product is solving your target market’s key problems. You shouldn’t be trying to convince your customers they need your product - you should be making a product or providing a service they already need.

6. Network extensively; Connect to other new business owners or established companies in your field. Build your business network into a super charged referral network.

7. Watch the numbers; Get comfortable with your accounts and your profit and loss account. Quickly learn what numbers you need to be watching to monitor profitability.

8. Be patient - Wait for success; Overnight success is a myth for the vast majority of new start up businesses. Your business probably won’t be profitable in the first year, or even the first two to three years. Give yourself enough time to be successful before closing up. If you cant sustain your business efforts for at least 18 months you can’t legitimately give yourself the best chance of success.

Above all, remember you need not do everything yourself and you are definitely not on your own. There are so many good people out there willing to advise and help new businesses.

Make it and you will believe it’s the best thing you have ever done.

If you don’t make it, so what, it might be the end of that chapter but it doesn’t have to be the end of the book!

Nothing ventured, nothing gained!

Ian Skinner has over 20 years' experience as a company Director of a successful cleaning company and is a Mentor for small and medium business owners. For more information or to get in touch please email him on;