A New Year means a fresh start and new ventures. It’s the time of year that ignites the entrepreneurial flare in many, with recent research showing more start-up businesses are launched in January than any other month.
But, while it may seem the perfect time to turn over a new leaf and start your own company, research from the Small Business Association shows that over half of start-ups fail within the first five years of operation. This shouldn’t be a deterrent by any means, but more of a reminder for business owners to ensure they have all the tools in place from the beginning, to help them succeed.
Most of the time, the downfall of a business can be avoided with careful financial planning, right through to a developing an effective marketing strategy and seeking realistic goals.
Sometimes if a business runs into distress, the only logical step is to run it through an insolvency process, to ensure the best outcome for all stakeholders, colleagues and creditors alike. What any business owner will want to ensure is that things don’t get this far early on or indeed, at any stage of their business lifecycle.
First thing’s first. Before launching a product or service into a market, a thorough due diligence of market demand and competition needs to be carried out. It’s important to take time to get under the skin of your business sector to really know what you are going to offer to clients or consumers that isn’t already out there.
Clearly carving out your product or services’ point of difference will also help you define your target audience. It is better to meet new demand than try and piggyback off a trend in an already overcrowded space – innovation and out-the-box thinking are instrumental to driving sales in a niche space within any given market.
Sometimes it is important for entrepreneurs to take a step back when in the planning process of a new business. Consider reaching out to third parties for trialling goods to get honest, constructive feedback on what works well and what doesn’t.
Know the market like the back of your hand – it will put you in good stead for kicking off your business. Before you have even started trading, it’s vital to have your finger on the pulse with the trends and demands of your target market.
Setting out into market can be daunting and can be made even more nerve-racking if the planning and preparation gets forgotten about. Give yourself the best head start by ringfencing the time to widen your knowledge, before steaming full-speed ahead.
Having your finances in order is pivotal to the success and longevity of your new business venture.
You can never plan too meticulously when it comes to money, and it’s important you can speak openly with your financial advisers to create strategic, robust and realistic financial plans that are up to the task of floating a new business. Budgets should include overheads, income projections, sales forecasts, expenses and an allowance to cover any unexpected crises such as death, cyber-crime or fluctuations in economic circumstances.
Having the upfront capital to cover set-up costs is the first hurdle. Some businesses may require more financial support than others, not just in the early days but throughout the lifecycle of their firm. For example, some manufacturers or engineers working in the aerospace industry may require expensive machinery to deliver on contracts. Or, some seasonal businesses may require cash flow support during peak seasons. In these instances, using invoice discounting or hire purchase facilities from your bank may be suitable for covering hefty upfront costs or bridging payment terms.
Poor cash flow is the biggest facilitator of SME failures, highlighting the importance of having contingent processes in place, so that management teams have a 360-degree oversight of all pockets of money throughout the business.
Your employees truly are the backbone of your business. According to software company Xero, for eight out of 10 start-ups, the first port of call will be to bring in families and friends to help set up the business. This could mean taking friends from financial backgrounds, or those that have launched their own business before, to work collaboratively to scale up your business dream into a functioning start-up.
One benefit of doing this is that your relatives and peers are more likely to be emotionally invested and advocates of the business product or service offering. If you are fortunate to be surrounded by individuals wanting to pour their efforts into your company, capitalise on this support.
As your business starts to grow, you will need to consider broadening your horizons to tap into the best talent in the game. Building an ambitious team that is well equipped to deliver results for the business, is key to the overall success. Also, at this stage, engaging a trusted Accountant or Solicitor will remove some of the day to day worries that may be impacting on your ability to focus on continued success.
Recruiting talent can be the hard part for start-ups, as it’s likely no-one will have heard of your brand yet. Building relationships with potential candidates is the first step in the road. Sell the fact that employees tend to have unparalleled exposure to several areas of the business and will be able to make huge professional or skills contributions to the company and help shape its future.
Create an in-house recruitment role. If you have someone on the ground who can proactively advertise job vacancies on websites, forums and social media, it will play a pivotal role in cherry picking those you deem fit for the role. As part of a small team, the person wearing the recruitment hat will also be an integrated part of wider operations, and in one of the best positions to advocate the company vision and dreams.
Management teams should remember not to run before they can walk. Pre-empting growth and resource will help you avoid rushing into employing someone who may not be quite the right fit for the culture or proposition of the business.
Although there are endless opportunities that coincide with launching your own business, it doesn’t come without its hurdles. If you sense something is going wrong in the business, whether that’s a blip in sales or consistently not reaching your desired target audience, seek guidance in the early stages. Speaking to specialist business advisers is one way of identifying the source of a problem and working collaboratively to stop or reverse any potential damage.
If your issues are financial, consider identifying suitable funding sources with specialist start-up advisers, a local chamber of commerce or finding yourself a business mentor. Someone who has been through similar experiences of launching a business will be best placed to help guide your strategy.
Whilst having funding support is sometimes instrumental in helping you achieve your goals, it’s important to not get yourself tied up with a loan you are unable to pay back. Any loan should be drawn down with caution, and built on realistic repayment plans that ensure you aren’t risking too much, as that may impact your personal life.
Branding is important for every business, but it’s particularly important for start-ups that need to cultivate customer impressions and convey clearly, exactly what it is they are offering clients or consumers.
It can be easy to let brand-building slip when entrepreneurs are in the early days of developing products or trying to drive recruitment. But, the importance of this aspect of the business should not be forgotten about. Devising a brand narrative and knowing who your target audience is in all of your communication mediums will also inform your wider goals in the long term.
You may have a great product or service on offer. But if you don’t tell its story in a relevant way it isn’t going to gain traction in the market. Work alongside branding specialists to create an identity that will put your business in good stead for getting in front of the people you need to drive sales and growth.
Branding is more than skin deep. But, it is only with time, consistency and meaningful engagement with your target audience that you can make your business one that customers truly buy in to.
First published in the Essex Chronicle in December 2018.