The number of people starting up a new business is increasing year on year.
More and more people are turning to the flexibility, freedom and potential rewards that come with being your own boss. But the failure rate for new businesses is high. Many don’t make it to the second year. So how can you make sure that you are one of the successful ones? We’ve compiled this guide full of top tips to ensure your business survives and thrives.
Your business idea
Every new business starts with an idea. This could be for a product or service. Before you jump in, try to describe your business idea in 1-2 clear sentences. This is your ‘elevator pitch’. It’s harder than you think!
But it will help you to focus and define what you do now and into the future. Look at the market that you are going into (or trying to create, if you are truly offering something unique).
Find out what your competitors are doing: understanding how many competitors you have, what they offer and how they market themselves will help you decide how to compete against them.
Find your Unique Selling Point (USP). What is the one (or two) factors that will make your business different? This is a critical step as it will shape everything that you do as a business, from working out how you position yourself in the market and what to say on your website, to how much you can charge for your product or service.
What is your vision for the business?
Draw up a business plan for the company. Going through the discipline of writing down your goals, and how you are going to achieve them is a really good exercise. Set yourself SMART objectives for your business: Specific. Measurable. Achievable. Realistic. Timely. That way, you have a clear focus on the challenge that lies ahead of you.
It is important to have an idea of where you want to go as a business. For example, you might want to become established as a leading window and conservatory cleaner in your local area, within the next 12 months, with 200 customers. Then work backward to how you will get there. Try to be realistic. How many times have entrepreneurs been thrown out of the BBC’s program Dragon’s Den for having an unrealistic vision (and therefore value) for their company?
Define your target market?
Develop a deep understanding of the customers that make up your target market. Targeting the whole market is a shortcut to failure. Instead, segment the market into more manageable chunks. Find the segments that will be easiest to sell to, or offer the highest profit potential. This influences how you will set about marketing your product or service to them.
If you are selling CV writing services, your segments could be school leavers with no experience, graduates with a degree, back to work parents, older consumers.
Define their characteristics. What motivates them to buy? What are their challenges? How much purchasing income will they have? Where do they shop? How do they like to be contacted? – not everyone likes getting email for example.
Attract and retain the best people
One of the golden rules of launching a new business is to make sure that when you come to building a team, you find and retain talented people to work with or for you. If you try and do everything yourself, you increase the risk of business failure as it is incredibly hard to juggle sales, marketing, finance, legal and HR responsibilities.
A good rule to follow is to hire people that can do a job better than you. In the early days, you might want to hire generalists that cover multiple roles but as you expand it will be important that you have specialist people that are really, really good at just one thing. That might be sales, training or accountancy.
Building a successful team requires more than a good salary. Flexible working hours, remote or home working capability and employee share options are all increasingly desirable factors for prospective candidates. It’s about creating a great company culture that can attract and retain the best people to make your business fly.
Developing a clear and consistent brand and continually reinforcing it provides a solid foundation for growth
Automate as much as possible
Amongst the many roles, a business owner has, managing the variety of areas involved in running and marketing a business can be challenging. However, there are a number of free resources and software that can help you automate and manage different tasks, so you don’t have to.
Mailchimp is a powerful automated email marketing platform that offers you the ability to email up to 2,000 contacts free of charge. Hootsuite, Buffer and Tweetdeck enable you to manage social media platforms from a single system, including scheduling posts which helps the busy business owner to keep on top of things.
Many small businesses are turning to tools like these that are available ‘in the cloud’ to benefit from its accessibility and security. These are known as ‘Software as a Service’ and are accessed online. They reduce deployment costs and simplify areas like your accounts package, or managing payments via Direct Debit, which previously might have been out of the reach for a new business.
Building a brand
Developing a clear and consistent brand and continually reinforcing it provides a solid foundation for growth. You can get a professional logo and brand identity at sites such as 99Designs.co.uk without breaking the bank. Once your brand is established, reinforce it by using it everywhere to build credibility and trust.
Use your brand across all elements of your company from business cards through to your website. Speaking of this, a good website that clearly describes what you do and makes it easy to buy from is an absolute must. Using tools like Wix to create your website, can help you get set up quickly using prebuilt templates without having to be a specialist.
Don’t forget to think about how you speak to your target market. When creating your messaging for your customers, make sure you use an appropriate ‘tone of voice’. This can demonstrate that you understand your customers and speak the same language.
Delivering a superior customer experience
At the heart of any organisation is the customer. Set yourself a goal to deliver the highest levels of satisfaction at each stage of your interaction with a customer from taking an order, providing a product or service and ultimately billing and getting paid.
Do this right and you’ll develop a loyal customer base which could translate into a regular stream of repeat business.
Make it as easy as possible for new customers both online and offline to buy from you. The latest technology from companies like Bottomline or iZettle enable you to offer multiple payment channels such as Direct Debit, Standing Order, mobile payment, credit, and debit cards.
If you are offering credit terms on a ‘buy now pay later’ model, then you will need to manage how you collect money from your customers to avoid potential bad debts. Poor cash flow is mostly caused by late payment of invoices and this is certainly something that can be addressed by any small business
One of the biggest obstacles to starting a business is often obtaining the funding in advance to invest in stock, offices or staff. There are alternatives to bank or family loans. An ideal place to begin is to look at a government-backed ‘start-up loan’. This is a personal loan available to individuals looking to start or grow a business in the UK.
Crowdfunding is growing in popularity. This is where you raise funds from multiple investors via a website such as Kickstarter, Indiegogo and Crowdcube. They each work in different ways so check their suitability to your own needs carefully.
Manage cash flow and forecasting
From day one you need to have strong control and visibility over your cash flow – that is money coming in and going out of your business. Keep a close eye on how you pay and get paid. Cash is the lifeblood of your business so create and regularly update a cash flow forecast. This will help you spot and deal with any potential shortfalls before it becomes a problem.
Maintain a sales forecast so you can see clearly the value of current and potential sales opportunities. This will also show you the contribution made from different sales channels such as online and face to face.
In all likelihood, how well you manage your cash flow and the strength of your sales forecast will determine whether your business survives.
Tap into the local business community
Starting a new business can seem daunting but local networking groups provide valuable support from other business owners. There are lots and lots of networking groups. For example, regional BNI events regularly bring together entrepreneurs in a relaxed and social setting.
In addition to making valuable contacts and offering learning opportunities, the primary goal of these groups is to help you to sell to other members who will be quite receptive to hearing more about what you offer.
Starting your own business is terrifying and exciting at the same time. Getting your idea to the market has never been easier with the accessibility of the internet and use of social media. If you follow the practical tips above you will be well on the way to launching your own business and seeing your idea flourish.
A guide to getting paid
One of the most well-loved lines in cinematic history is from the film Jerry Maguire. Picture the scene. Cuba Gooding Jr insists his agent, played by Tom Cruise, repeats the phrase “Show me the money” over and over, at the top of his voice.
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