Our Blog page banner

Business start-ups: How to survive your first year

 

Business start-ups: How to survive your first year

The statistics for start-up businesses failing may make it seem to the casual observer that only a madman would ever dare to set up their own company.  

Some studies cite up to 90% of business start-ups not making it to the second year; others may say 50% of start-ups fail within five years. And while extraneous market factors do play a role in the success of young businesses, a lack of planning, research and care can often be equally to blame.

The reasons why a fresh-faced and bright-eyed start-up may not make it to its first Christmas are numerous, ranging from an internal dynamic that makes the business unworkable, to a lack of consumer interest or an inability to tame cash flow.

Some common reasons given for faltering at the first hurdle are: 

·         a tax system which does not support start ups

·         lack of bank support

·         problems with cash flow

·         too much competition

·         everyday business costs

·         lack of government support

·         too much red tape.

Surviving your first year

However despite these gloomy figures it is possible for a start up business to grow and survive. It will just need planning, organisation and structured support.

·         Do not start a business unless you are sure that there is a demand for the product or service you will provide. Research the competition, the market, and the consumers or potential consumers. If all the research pints to demand then your start up is more likely to succeed. Continue market research after you have started the business in order to spot trends and demands in the market.

·         Stick to your business plan and original vision. If bank and investors think your plans and vision for your business will work, then it will probably work.

·         Don’t diversify too early, if you do one thing well continue with it until the business is financially sound enough to diversify and develop.

·         Explore funding options other than banks, crowdfunding and ‘angel investors’ are popular in the world of start-ups for a reason.

·         There are plenty of organisations offering support and advice to start-ups, use them.

·         Ensure that your budgeting and forecasting is accurate. If it isn’t then your start-up will run the risk of becoming under-funded and running out of money.

 ·         Don’t try to expand too quickly. If you plough funds into rapid expansion and an unplanned or unforeseen drop in sales and subsequently income occurs then your business could easily go bust.

·         Be sensible with your pricing of services or products. If you under-price your margins will be too small to support the business. If your services or products are too expensive you will sell less or potential clients will go to your competitors. Either way you will lose money.

·         Be proactive rather than reactive. If you can foresee future financial issues prepare for them. Plan a marketing campaign. Reduce outlay on unnecessary items. Chase up your creditors.

Start-ups are not automatically doomed to fail and you should never let the failures of others discourage you from following your dreams. It will take planning, good advice and using the support available to you.

If you want advice on how to ensure your business succeeds contact us today or give Tracy Attard a call on 01628 631056.