Planning on starting a new business? Whatever you do, don't fool yourself into thinking that failure is not an option. Failure is most definitely an option. A study by the U.S. Small Business Association finds that only two thirds of small business startups survive the first two years and less than half last four years. A sobering thought indeed.

But it doesn't have to be that way. Or at least the odds don't have to be so stacked in favor of failure. Following a few simple, common sense startup strategies may make a difference between success and failure.

It's been four years since Herb Ames started Devin Group, Inc., a Hamilton-based business development and management consulting company. Things seem to be going well after the obligatory growing pains.

Devin Group, Inc. does project management and strategic planning for companies throughout Mercer County. Its clients span the spectrum from insurance, to construction, to engineering, to payroll, to landscaping. As an aside, Ames is the former head of the Economic Development Agency for Mercer County and one of the founders of First Choice Bank.

Why did Ames start his own business? "I wanted to try it and knew if I didn't take this opportunity, I probably never would," he says. "Now I can never say I didn't try or wonder what if."

Ames began by taking everything he'd ever done in his career and putting it in a brochure. A large circle of friends in business didn't hurt either. "I had some good friends with established companies who gave me work and helped me get started," he recalls.

Liz Illgen is president of Practical Management Solutions (PMS), a two-year-old business advising company based in Hamilton. Some may call what Illgen does consulting, but she opts for "advising," explaining that "consulting" is a term reserved for big companies with massive budgets.

PMS works with business owners for a few hours a week over a long period of time to slowly implement change. She's been doing similar work for the past 20 years. After starting her own business once before and going through all the ups and downs one could possibly experience, she decided to take her education and experience and do it again, this time helping other businesses get started, get their businesses under control, grow, exit gracefully, and become financially successful.

Keva Stewart launched Keva Stewart Design, a full-service interior design firm, in 2007. Most of her work is designing model homes for custom and commercial home builders. It's a business she knew a lot about, having done interior merchandising and model home design for other companies for a number of years.

Stewart started with some solid ideas, a good client base, and an instinct for design. She was also savvy enough to realize she needed extra help to get things off the ground. That's when she called Illgen.

"No matter how much you think you can do on your own, you just can't," explains Stewart. "You're so caught up in what your vision is, you forget about all the details."

Illgen made her think about the big picture and the details, and where she wanted her business to be in six months and in a year.

"She got me thinking about where do I want to take this?" recalls Stewart. "Who did I want my client base to be? What kind of builder? What are their demographics? What kind of client base do they have? What kind of revenue do they bring in? She made me paint a picture of my ideal client."

Illgen also provided Stewart with guidance for protecting her business, writing contracts, and encouraged her to think about the entire business process, from the time she got the phone call from a client to the time the job was installed.

Additionally, she helped Stewart understand that just as clients need to qualify the designer to make sure they have the right skill set for the job, the designer must also qualify their clients, otherwise Stewart could become bogged down in $200 design jobs.

"That's not the client base I want," asserts Stewart. "She made me focus on, 'do I want to do a couple of little jobs every week or do I want to do a couple of big jobs every year."'

After 18 months, business remains steady. "I have plenty of jobs to carry me through to the end of the year and I'm working on my 2009 marketing plans - who am I going to target next, and how to expand the scope of my current target base," says Stewart.

One of the biggest stumbling blocks for startups like Stewart's is not having a solid business plan. That solid business plan should spell out the nature of the business and include such critical components as a marketing plan, a financial plan, and an exit strategy.

Outside help can often be helpful at this stage. "They need to understand that they need help," opines Bob Prunetti, president of Phoenix Ventures, a business-consulting firm that works with startups, small businesses, micro-capped businesses, and public companies.

Prunetti explains that most companies are started by people who have a good idea and are an expert in whatever that idea may be, but they're not experts in business management, finance, capital markets, or marketing.

"You find that all the time and usually that's their downfall," he says. "It's not that they think they don't need help; they think that they can't afford it. My answer to that is you can't afford not to get help."

That help may come in the form of a securities attorney, an accountant, or a consulting firm such as Phoenix Ventures.

One of the first things Phoenix Ventures does when hired by a client looking to start a business is help them develop a business plan. "Believe it or not plenty of businesses don't have that," says Prunetti. "It may be in their heads, but it's not written down clearly or with clearly delineated objectives."

Ames had a solid business plan when he started Devin Group, Inc., but one that wasn't written in stone. "When you write a business plan, you've got to realize that it could change overnight," he says. "My business plan changed because different businesses were asking me for different things and it wasn't really where I [initially] wanted to go. I realized they saw something in me that I needed to take a look at."

Illgen is a firm believer that the end is the best place to start a business plan. "Start with the end in mind," she says. "If you don't know where you want to go, it's like getting in your car and driving to L.A. without a map, and without a plan of where to get gas and stop and sleep overnight. Otherwise it's going to be the trip from hell. Business is the same way. You need a plan and some idea of where you want to end up or you're never going to get there."

But what's all this about an exit strategy? "There are a number of ways to exit your business, unfortunately most people choose the default method, meaning they either die, become disabled, or go bankrupt," notes Illgen. "Far better is some sort of an exit strategy."

Proper funding can also make a difference between success and failure. "This is a huge mistake that probably 99 percent of businesses make," asserts Illgen. "Most businesses start with something like, 'I'm ticked off at my boss,' 'I've been downsized,' or 'I can do way better at running a company than that jerk I work for.' So they go into business because they have a good idea or a skill, but know absolutely nothing about [running a] business. They believe they can finance their business with their personal savings, taking out a home equity loan, maxing out their credit cards, borrowing money from friends and family, and then get in over their heads because they don't have a plan."

Although credit is tight now and it is difficult for a startup business to get funding, Illgen still advocates borrowing the money necessary to get started. "If you have a plan, you know how much you need, how much you need to spend on marketing, and how much you need to spend on salaries, and how much on office space, and all those other things you need to spend money on," she says. "If you have a good business plan, you'll probably be funded and your chances of success will be magnified exponentially."

Ames agrees. "You must have sufficient capital where you're not worrying about paying your day-to-day bills or day-to-day financial issues. That will strain your business and strain you mentally because that's all you'll focus on."

"Shortage of capital is a prescription for failure," adds Prunetti. "It may be a little more difficult now in regard to financing, but with any sort of bad time comes opportunity. There are people out there who have cash and are looking for an investment that could be substantial, but very risky."

Key to acquiring financing is a good management structure. Prunetti explains that it's not unusual for financial backers of startup businesses to want to know not only the obvious about the product or service and the market for those products or services, but about the management of the company.

"That's what they bet on," says Prunetti. "They bet on the product and the management structure."

Marketing is another area that a startup needs to focus on even though many fail to do so. "We receive thousands of advertising messages on a daily basis. If you don't have a strong brand or a strong identity of what your company is and what it is you do, and don't effectively communicate that information to a well targeted audience, you're wasting your time and money and they're never going to find you," says Illgen.

Taking care of all the necessary legal business related to the business shouldn't be overlooked either. Failing to register astartup is not unusual and many business owners are shocked when the IRS comes knocking for taxes owed.

"If you're not making sure you're registered and properly paying your taxes and informing the government of everything you're doing, you can quickly get yourself into legal trouble," says Illgen.

She recommends hiring an attorney who is experienced in dealing with businesses and who can provide advice on creating the appropriate business entity.

"Being a corporation versus a sole proprietor and everything in between is not right for every single person or every type of business," Illgen says. "You need to understand who you are and take care of all the legal issues."

A common mistake made by those who start their own business is trying to do everything themselves. "This is a trap most business owners get into because they didn't have a plan or were not properly funded," states Illgen. "Each of us has strengths and weaknesses and we have to know what they are so we can go out and hire our alter ego to perform those tasks and jobs that we don't want to do, aren't very good at, or just don't like doing."

"When you're starting out, you need to realize you can't do it alone," adds Ames. That wasn't an issue when he started Devin Group, Inc. Ames had the foresight to hire an assistant from the get go. This allowed him to focus on what he needed to do to generate revenue.

If a startup is more than a sole proprietorship, it's critical that employees be viewed as an asset. "The number one asset any company has is its employees," states Illgen. "You treat them right, give them autonomy, train them well, pay them according tothe market, give them the benefits you can afford to give them, and make sure you reward them when they do things really spectacularly and you'll keep them for life."

The final strategy for success can be summed up in the old saw, "All work and no play make Jack a dull boy." That's why Illgen and Ames emphasize the need to keep balance in your life.

"I see far too many business owners - and I'm no better than anybody else - who have a tendency to work 24/7," says Illgen. "If they're not at work, they're thinking about it, they're worrying about it, they're taking phone calls during family time, and they're bringing their laptop on vacation. The bottom line is if you don't take time for yourself and your family, friends and acquaintances, you're not going to have balance in your life."

Ames, who has taken everything he's learned from working in the public and private sectors and put them in the recently published book, "Aim High: Common Sense Success for Common Sense People", admits the biggest mistake he made at the beginning was being involved in two startups at the same time. "Whatever you do, don't try to start two businesses at once," he cautions. "You need to totally focus on one."

Illgen concedes that she's learned a lot of these lessons the hard way, which isn't such a bad thing. "Every person on this planet needs to make a commitment to themselves to learn something new on a daily basis," she says. "If that is learning through experience, reading, through osmosis, it really doesn't matter. You have to be constantly upgrading your skills and learning from your mistakes so you don't make them again."

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