By Mark Wright on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs
With over 660,000 new businesses registered between 2019-2020 in the UK – which equates to over 70 per hour – it goes without saying that start-ups face some stiff competition on their journey to success.
The Telegraph reported in 2019 that 20 per cent of new ventures will fail within just 12 months of opening their doors, with that figure climbing to 60 per cent within the first three years. In fact, failure is so widespread at the start-up phase that many entrepreneurs have taken to writing a “failure post-mortem” to assess where they went wrong in the hopes that other aspiring entrepreneurs can learn from their mistakes.
Being aware of some of the most common setbacks and obstacles facing a new business is vital for recognising the weak points in your own model, enabling you to do something about them before your start-up becomes part of that growing 60 per cent.
#1- Cement your vision
Start-ups face many challenges in the initial stages, and without a clear vision in mind of where you and your company are heading, you can easily lose motivation.
Defining a mission statement isn’t simply stating what your vision is, but actively laying out the framework to achieving that vision, so you can establish clear goals and start to measure progress. Not only this, a clear vision also acts as a foundation for your entire business, allowing you to develop a strategy for the long-term that engages and unites your staff in what you are working towards and why.
#2 – Take control of cash flow
Poor financial planning is one of the primary reasons so many start-ups fail before they truly get off the ground.
Why? Businesses in their infancy can often appear profitable on paper, but money owed is not the same as money in the bank, and the gap between the delivery of your product or service and receipt of actual payment can leave you in a financially precarious situation.
Without a healthy cashflow and firm grasp of costs incurred, growing and scaling your business, or securing additional funding will be an uphill struggle. Developing strict budgets and cash flow forecasts can help mitigate these issues, enabling you to keep on top of your finances so you can plan for both the short and long-term.
#3 – Build your brand and market your business
The importance of a strong brand identity cannot be overstated. So many start-ups neglect this crucial aspect of their company, when it should be part of their vision from the start. Your brand is what communicates your values and is what will help you build trust and recognition, and effectively tap into your target customer base.
Though a strong brand identity is what will differentiate you from your competition, this is futile without a solid marketing strategy in place to ensure people actually know about your business. Without proper marketing, you might have the best product or service on the market, but your ability to generate leads, acquire clients and ultimately convert them into sales is going to be severely hampered.
Successful companies, no matter their size, understand the importance of both brand identity and marketing. Though start-ups often operate on tight, limited budgets, omitting or severely cutting your marketing budget is always to the detriment of your own business. Instead, look at cost-effective ways to get your product or service out there, or outsource to a marketing provider.
There are plenty of opportunities for small companies to market themselves without breaking the bank, and however you choose to do it, always have a strategy in place, and regularly measure your marketing efforts to track their effectiveness and ensure you are getting a good ROI.
>See also: Why every entrepreneur needs their own mentor
#4 – Hire the right people
Having the right team in place can make or break a business in the early stages, so having a clear idea of the kind of people you want in your business is key. The hiring process can be an arduous one, more so when you have limited capital to spend on personnel, so ensuring you take a discerning approach to your first hires can save a lot of time and resource in the long-run.
Bringing in too many people too quickly can create problems – particularly if you don’t have the cash and income to sustain payroll. In the early days, it’s often better to have a small, dedicated team who understand the vision and direction of the business and can help you establish a positive working culture that will pay dividends in recruitment further down the line.
High rates of staff turnover can also be avoided by establishing clear lines of communication with your employees and ensuring they know what is expected of them from the start while developing a workplace culture that makes them feel appreciated and valued.
#5- Create a scalable business model
The goal of every entrepreneur is to ultimately grow their business into something bigger and better, but growth that your business is not prepared for could be damaging if you don’t have the structure in place to support it. You may find your business is proving to be a success, but don’t let this tempt you into jumping headfirst into scaling without any strategy or plan.
Take the opportunity while your business is still in its infancy to create the structures it needs to scale. By implementing the right procedures and systems in the early stages, you will avoid the headache of playing catch-up later on as your company expands, and without negatively impacting customer service and/or product delivery.
#6 – Never, never give up
Navigating the many pitfalls of building a new business may seem like a daunting task, but resilience and a readiness to change tact when something is not working are hallmarks of a good entrepreneur. And finally – in the words of Winston Churchill – never, never, never give up.
Mark Wright is a winner of BBC’s The Apprentice and director of digital marketing agency Climb Online
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Mark Wright, Khareem Sudlow
