Though the ratios and time frame often vary, the overall message is always the same; the majority of start up businesses fail within a few years of opening. According to a recent report, about 60% of 660,000 new businesses registered every year in the UK fail within three years, and 20% last for 12 months. These businesses generally fail due to several, interconnected factors, such as the lack of market for products and services, low cash flow, and poor management skills.
So, before you begin your next venture, a little planning and preparation is essential. Whether you’re starting a home-based baking business, an IT company or anything in between, here are 5 IDEAL steps to start up success.
CREATE A SOLID BUSINESS PLAN
Creating a business plan is vital, no matter how small you anticipate your trade to be. An effective strategy, done with due diligence and detail, will define the total expected costs, technology required, level of marketing, staffing, and manufacturing needs …basically, everything. Within that plan, be sure to cover the two main aspects which require detailed strategising; how you intend to market your products and services and how you intend to sell them. A detailed plan will not assist you during the initial phase of business only, but it will also act as a guide in making smart decisions that will lead to growth and development later down the line.
RESEARCH THE MARKET
Overlooking the importance of conducting thorough market research is a common – and all too often fatal – mistake which aspiring entrepreneurs commit. If you want to stay ahead of the competition, commit yourself to researching the market in a depth and breadth you think preposterous on paper. By doing extensive market research, you get to know your competitors and protect yourself from investment losses. You’ll be able to determine if there is a demand for the products and services you intend to sell based on consumer responses, and also analyse the key demographics in the supply and demand chain.
PRIORITISE BUSINESS INSURANCE
For start-ups, unexpected risks can lead to premature business closure. To avoid such events from occurring, it’s prudent to invest in the best insurance coverage available (within your budget, of course). Fortunately, there are different types of business insurance options suitable for all firms and budgets. Before settling on any insurance plan, make sure to factor in your business structure along with the current and future needs of the organization. According to Cerity.com, buying the right insurance allows you to work smarter – not harder – while protecting your business from liabilities. In short, insuring your start-up can save you thousands of pounds in terms of legal costs and worker’s compensation should something go wrong.
SELF-FINANCE YOUR START-UP
With only a small percentage of lenders willing to offer loans to a new business, accessing funds to get things going can be a real obstacle. Besides, securing credit can involve high-interest rates which may lead to high debts and, eventually, business closure. The best option for any start-up – if you have the luxury of course – is self-financing, as you will stay in control of investments and, in turn, your company. There are also other ways to self-finance a business apart from personal savings and funds from friends or family, so consider these before the process of planning truly begins.
ESTABLISH A GREATER ONLINE PRESENCE
With 45% of the world (a whopping 3.48 billion) now having a social media account and millions scrolling through their feeds at any given moment, it would be financial suicide not to be harnessing the power of the click, constantly and consistently. While there are plenty of paid options to promote your business on social media, you should only do so with scrupulous tracking of analytics to assess whether the reach of such posts is worth your investment. You might find that you could achieve the same reach via free social media channels; making an Instagram and Facebook page (we all have one, right?) is easy and needn’t cost you a penny. Just ensure your page is captivating and unique, as there’s a pretty massive crowd out there to stand out from.