It requires a certain kind of person to start up a new business. Taking an idea from a mere concept to a reality takes a certain amount of gumption and boldness. It is often said that half of businesses fail within the first year, and there are suggestions that 90% of startups will ultimately fail. So for a shot at success, you must have tireless passion, resilience and an unwavering belief in your business. But your character can only get you so far. What do you need to do to avoid common pitfalls?
Fail to Prepare; Prepare to Fail
So the old adage goes. But when it comes to starting up a business it’s so true. Many people are simply unprepared for the financial challenges their new business will face – especially in its first few formative weeks and months. A steep learning curve awaits anyone starting up a business from scratch, but without getting some of the fundamentals right from the get-go, businesses are likely to struggle. And with the added pressure of financial investments, it is of integral importance to begin to quickly balance the books and develop a strong reputation quickly.
Ensuring you adequately research the industry and the location in which you will be operating are obvious and basic cornerstones on which to found your business – but with passion and drive behind your own idea, you can become blinkered and these essential considerations can be overlooked.
Adequate preparation and research can help you to avoid nasty surprises in the future; the costs of running your business will come more clearly into focus and you can plan your venture accordingly.
The Hidden Costs of Growth
So your business has survived its first six months? Congratulations! You now have the opportunity to really get established and start to plan your future growth. It may be tempting to think that you have a winning formula and that all of your costs are now accounted for. However, growing your business requires continued adaptability and prudence. Don’t be lulled into a false sense of security by your initial success, and ensure your future needs are accounted for.
For example, you may enjoy working as a sole trader, but ultimately growth will catch up with you and you will need to consider the costs of new staff to develop your business.
Another consideration is delivery costs. Whilst a conventional courier service may have served you well in the first few months, long term growth strategies require long term thinking. Therefore finding a cost-effective delivery solution to support your future needs is vital.
Keep Ahead of the Game and Prepare for the Worst
Whilst preparation and prudence will get you so far, you never really know what is around the corner. That’s why it’s so important to continue evolving and developing your business in order to remain competitive. As an entrepreneur it’s your job to be a trend-setter, and find new ways to develop your industry. Investment is usually required to do this; it is wise to set aside a sum of money for the future development of your business when the time is right to do so. In the meantime this money could serve as an emergency fund to use if your business is undergoing financial difficulty.
The 21st century has a competitive business market, but with the right idea combined with drive, preparation and prudence, you will be well placed for long-term success.
Have you been caught out by hidden costs in your industry?