With one in four start-ups failing within the first year and only half making it to the five-year mark, it’s safe to say the first few years of your new business will be far from easy. You’re likely to experience a number of challenges within your first year that will leave you struggling for answers and sometimes even questioning why you started in the first place. Not to worry, every entrepreneur goes through this, and with the right steps in place you can alleviate the likelihood of falling victim to some of the most common start-up problems. And if you do suffer from some of these difficulties you will have a contingency plan that will have alleviated the damage, ensuring you can get through to the other side unscathed. Here are our 5 tips to help you survive your first year as a start-up.
Keep costs to a minimum
It may seem obvious but most start-ups usually fail because they run out of money, so try and keep expenses as low as possible. The nature of a start-up is that your work and income will be unpredictable, so only permanently hire staff that are essential, for anything else you can use freelancers/contractors. If you don’t do this, you risk wasting money you can’t afford to pay staff that have very little to offer you for large periods of time. Websites such as peopleperhour.com are a great way to find temporary staff. Don’t feel you have to spend money on an office space, obviously if your business expands you may have to, but remember some of the world’s leading companies started out in homes and garages, such as Amazon, Apple and Google.
Have a business plan
If you’re looking for investment you’re going to need a business plan, no one is going to give you money without one. But even if you’re not looking for investment it’s just good business sense to draw one up. It doesn’t have to be lengthy, just something that underlines what it is you’re trying to do, how you’re trying to do it and perhaps some targets to assess your progress. You’ll more than likely find that as you write out your business plans your idea becomes stronger and more developed. It also serves as a reference point when you’re unsure of what direction to head in, and also as a reminder of why it was you started your business. Without one you’re risking a lack of direction, which no business can afford, especially a new one.
Look after your finances
As strong an idea as you have, no business can succeed without paying close attention to its finances. Large companies employ hordes of highly trained accountants to ensure their finances are taken care of and everything runs smoothly, but hiring a team is not an option for tiny start-ups. That doesn’t mean your business has to fall victim to cash flow problems though. Taking advantage of online accounting software allows you to prepare for and prevent cash flow problems such as bottlenecking. You can easily create customizable and professional estimates, quotes and invoices with this software. The cash flow statements will allow you to always see where your company stands. What’s more, it affords you the time to focus on other aspects of your business.
Advertising
If your revenue isn’t increasing as you’d thought it would it doesn’t necessarily mean your product or service is one people aren’t interested in, they may simply not know you exist. It can take years and years of quality service until a business becomes established and well known, but there are ways to speed this process up and make sure any potential customers know you’re out there. Investing in advertising should help your brand get noticed, but remember simply throwing money at the problem won’t necessarily fix it. A well thought out advertising strategy is essential, make sure you know your target market. If you don’t let the right people know about your business how do you expect to grow?
Reinvest back in your company
Finally, all that work has paid off and customers are paying you for your product, the temptation is to celebrate by spending your hard earned profits, but now’s not the time to sit back. It’s essential for you to reinvest back into your business otherwise you risk stagnation and in business you can’t afford to stay still. Remember you must speculate to accumulate.
So, it’s clear to see that starting your own business isn’t for the faint of heart and there are likely to be many difficulties to navigate during your early years. Remember though, while the statistics may look a little scary for start-ups, with some clever thinking and a little forward planning, you can swing them back in your favour.