Most of the budding entrepreneurs have a fear in the back of their mind about their business failing in the very first year. And this fear is legitimate. If you are about to launch a business, you must have heard about other businesses failing one after another in their initial years.
Setting up any sort of business comes with multiple challenges. According to statistics, only 20% of businesses survive the dreaded first year while a whopping 80% fail during this initial stage.
Usually, not having enough cash is the major cause of such a huge number of businesses failing, but it is often the last straw, with several other aspects leading to this collapse.
Provided a 50-50 chance of a business surviving the dreadful first year, it is not good to sit back and let time decide your fate. Knowing about the pitfalls and taking right steps to avoid them can be advantageous to entrepreneurs looking to overcome the challenging first year.
I have dealt with the same situation in my business and after closely working with numerous businesses; I have learnt ways to set up a business for success from the beginning, especially during the crucial initial years.
Here are some of the tried and tested things to do in order to get your business to thrive through the first year:
- Prepare a tailored Business Plan
As an entrepreneur, you skip preparing a business plan, especially when you do not wish to go for a bank loan or get an investor. But writing a plan gives you an idea about how you can execute your vision for the business and even gives you a better understanding of problems that you may face in the future. This way you can find solutions to problems that you are facing. You would also have a timeframe for your launch and sales process. It is not necessary that you need a lengthy documentation for a business plan, but it should have enough details about the target market as well as the business model.
- Cut The Expenses
Most of the start up businesses fail typically because of their financial instability. Therefore, it is imperative to cut the expenses as much as you can in the initial years till you start making adequate sales. A good way to start is to hire employees that you desperately require. You can use alternatives such as freelancers and contractors. If there isn’t a requirement for a larger office space, opt for a smaller office. As a general rule, only spend money where you desperately need to, not on the things that you should.
- Don’t Be Hyperactive But Productive In Work
During the initial years, be selective in how you spend your resource, especially your time. Many entrepreneurs try doing too much at the same time and instead of moving forward, they become busy fools.
I’m not saying that you should not be active in doing things but you should not be a Yes-man. While considering customer requests, marketing, event or a partnership opportunity, make a decision after thinking how they fit your plan and the priorities at that moment in time.
- Keep Your Customers At The Heart Of Your Business
Your final goal should be to not just to create a great product or service but it should be to help your customers. Be in tune with what they need and improve everything based on the feedback that you get from them. When you give them something that they actually need or want, business sales will follow.
- Start Networking
In general, the more people you know, the better it is. Anyone whom you know could be a customer, potential partner, or an inspiration. Find and reach out to other entrepreneurs in your field. Reaching out to more people will expose you to more opportunities of having supporters which can help you when you need help.
Be courteous to people’s time, but also courageous in meetings. Whenever you meet new people, ask them questions that you have and give them opportunity to talk about themselves. Also, be conscious to send them a follow-up thank you. Remember, one golden rule about networking: The more you give to people, the more they wish to give back.
- Monitor Your Business
In the initial years of your business, resources are tight, and therefore it is critical to ensure your money or time is being spent correctly. Never assume that you know everything about your business. Equate the progress with numbers that you observe.
Engaging in analytics and charts can be overwhelming, but ensure that you have at least 2-4 key metrics that you can track all time. For instance, from where your website traffic or foot traffic is coming, or what is your total profit percentage per project or product.
- Have Emergency Business Funds In Place
Since running out of funds is the major cause for 80% business going downhill, you should ensure to keep a good cash flow for you business. In order to tackle the financial instability that your business can witness, go for alternative business finances such as cash flow finance or Invoice finance. These financial products can help you deal with money shortage in the initial years of your business.
Launching a start up business is a risk-prone and stress-inducing venture. But businesses do succeed than fail in their first year. If you are prepared, don’t hold back from taking the plunge, but make sure to be conventional in your planning, spending, saving, measuring and adapt yourself according to the market and time.