How to Maximise your Start-Up’s Chances of Success
Did you know that 60% of all small business start-ups fail in their first three years of trading?
There are multiple reasons for this. Sometimes customers aren’t prepared to pay the right prices, other times start-ups fall victim to issues like insufficient cash flow, and the list goes on.
Yet, while the stats are startling, they shouldn’t deter you from setting up your own small business. With the right planning from the outset, you can give your business a better chance of reaching its goals.
Here are five essential tips that should help you get the basics right, and move from a start-up to a successful business.
1. Do the homework
There are an estimated 5.5 million SMEs in the UK today, and close to 810,000 new businesses were launched last year. So, there may be a chance that you’re not the only one who’s come up with your business idea.
Do your homework and research your chosen market.
• Who are your ideal customers and what are they prepared to pay? Does this support your required margin?
• What businesses are already operating in your target part of the market?
• Is there a demand for your services, or a gap to be filled?
• What is your USP?
• Who are your main competitors? What are their strengths and weaknesses?
• How can your business stand out and compete effectively?
• What are the best channels to market?
2. Choose an audience/market and create a value proposition
Once you have a target audience, consider what value your business will bring to your customers and how you can make your business more appealing to them.
Consider the following:
• Pricing – is it economical for you to trade at a price slightly lower than your competitors?
• Could you do an introductory/bundled offer that will give you an edge?
• Advertising and promotion – how will you get the word out?
• Are your competitors advertising online or offline, or at all? What method is going to reach your potential customers?
3. Make a business plan
Creating a business plan might seem like a difficult task, but it’s unavoidable – or it should be. Your business plan should be the first thing you do before getting your business off the ground.
There are professionals who can support you with putting this together. But there are also free resources available. The Gov.co.uk website has many useful tips on writing a business plan.
4. Stay on top of your business finances
Keeping track of all your expenses as your business grows is essential. Fully separating your business and personal expenses can really help to simplify this process, especially in the early stages, and it can help you avoid spending hours sifting through and separating out any personal spending later down the line.
It’s not a legal requirement to separate business from personal expenditure, but it is a legal requirement to keep accurate financial records. Finalising and filing accounts and making tax returns for your business requires a record of money spent through company receipts, petty cash, orders, and delivery notes, so it’s essential you have systems which enable you to retain these details.
Estimate all your potential incomings and outgoings. That way you’ll know how much you’ll need in start-up funding from the outset, how many sales you’ll need to make to cover any outgoing payments, and eventually to break even.
Outgoings – there could be costs for renting an office, equipment and supplies, utilities, tax and contributions, any loan repayments and so on.
Income – All money that will be coming in from sources such as a second form of employment, benefits or working tax credit.
Sales and costs forecast – estimate how many sales you’ll be doing each month, accounting for any trends (such as seasonal) and align these figures with your estimated costs for making and fulfilling sales.
Use these figures to create a cash flow forecast, giving you a better idea of your revenue vs profits and what is available to invest and grow your business.
5. Engage your community
Many businesses succeed because they build up an engaged community, relying on these community members to provide honest feedback and promote/recommend their products and services to others through word of mouth.
Consider which social media platforms are the most direct way to reach your target market (if applicable). Before you create any social media accounts, it’s important to take your time to think about your market — are they using social media, or are they mostly offline? And once you’ve found these touchpoints, decide what your strategy for engaging with customers and producing content will be.
Another great way to build trust is to invite customers to review your services via websites like Trustpilot. This is a great way to show you offer a good customer experience and very useful for gathering feedback on how you can improve your products and services.
Paying attention to these basics will get you off to the best possible start.
This article was written for 123 Reg by Cashplus Bank.
|Cashplus is a leading UK challenger bank offering smart and simple banking services to UK small businesses. |
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