Going out on your own to start a business is a BIG step. It’s a giant opportunity to create your own enterprise, build a company and bring your business idea to life. But it’s also an endeavour that’s not free of risk. 9 out of 10 startups fail over the course of the business journey, after all.
If we look on the bright side, though, this also means that 1 in 10 startups will succeed. Here are five ways to up the odds and make your business one of the success stories.
1. Start with a great idea and know your Unique Selling Point (USP)
305 million startups are created globally each year. That’s a lot of competition for your own new enterprise. So, to make your startup stand out from the crowd, it’s vital to have a really clear idea of WHY you’re setting up this business.
For a business to be viable in the long-term it needs:
- A great business idea with a Unique Selling Point (USP) – every business starts with a great idea. But to succeed, you need to identify your unique position in the market. That means nailing your vision for the business: i.e. what you’re aiming to deliver and how the company will evolve over time.
- A detailed and evolving business plan – having a good business idea is a great starting point. But to turn this concept into a firm reality you’ll require a plan, a strategy and the initial funding to actually get this idea off the ground.
- Customers who see the value in your product/service – customers are the lifeblood of any business. Without paying customers, you have no sales, no income (revenue), no cashflow and no end profits: in other words, no business!
2. Define your Ideal Customer Profile and engage with these customers
Having a stable customer base gives you the solid foundations you need to build and grow the business. But finding those customers in the first place means having a very focused idea of who your Ideal Customer Profile (ICP) will be. In other words, who should you actually be targeting when selling your products/services?
To pin down this ICP:
- Know the customer pain point you’re solving – selling is all about understanding your customer’s needs. Find out the pain point or customer need that’s troubling them and find the best way to resolve it with your own products/services.
- Understand the key demographic you’re selling to – are you selling to high street consumers, or to business owners? Are they affluent Gen X professionals? Or are they thrifty Gen Z workers with less cash to splash around?
- Research your existing customers to find the sales sweet spot – look at your current sales data and see if there are patterns or trends around around your customers’ buying habits. If 80% of your sales come from one demographic, that’s 100% who you should be targeting.
3. Build a team that’s 100% on board with your idea
You can start this business as a ‘solopreneur’ and do everything yourself. Eventually, though, you’ll need to hire your first employees, so you have the resources to manage the increased workload and put down the foundations for growing the business.
When you take on your first employees:
- Make sure these candidates share your essential values – you have a vision for what this business will become. Any new employees must share this vision and the core values that drove you to set up the company in the first place.
- Hire people who are smarter than you in most areas – you’re an amazing entrepreneur, but you can’t be good at everything. Instead, hire people who have proven skills in sales, marketing, finance and operations, allowing you to delegate these tasks and focus your efforts on leading and growing the business.
- Look for loyalty and a flexible skill set – working in a startup is hard work, so it’s important to hire people who aren’t scared of hard work. Loyalty from your employees is a must, as is an ability to ‘muck in’ and work outside the defined scope of their specific job description.
4. Keep a close eye on your revenue and cashflow
Keeping your finances on track is an absolute must as an early stage startup. 82% of startups fail due to cashflow problems, leaving the founders without the funds needed to keep the lights on in the business. If you want to avoid this, it’s vital to be on top of your finances, with a clear understanding of your projected revenue targets and current cashflow position.
To manage your startup finances well:
- Set realistic revenue objectives and work them into sales targets – you need revenue (income) coming into the business in a stable and predictable way, to cover your costs, pay your people and generate profits. Calculate the revenue you need each month to survive and grow, and use this number to inform your sales targets, measure your financial performance and keep the future of the business on track.
- Use the latest crop of cloud accounting tools – accounting platforms like Xero or Quickbooks are a must for any serious business owner. These cloud accounting tools will help you keep digital records and gain real-time insights into all areas of your business finances, so you’re in control of your numbers.
- Run cashflow statements regularly – cashflow is the process of balancing the cash coming into the business (inflows) and the cash going out of the business (outflows). Ideally, you want to be in a ‘positive cashflow’ position, so your cash inflow number is higher than your cash outflow number. This provides cash to fund the operational activity of the business.
- Work closely with an experienced accountant – you might think that engaging an accountant is an expensive luxury. But it’s an investment in your business that will help you get the best advice and manage your finances in the most effective and profitable ways.
5. Be ready to evolve, change and pivot to make the business work
Managing a startup is often likened to riding a roller-coaster. There will be plenty of ups and downs over the course of the business journey, and knowing how to deal a downward trajectory is something that can often separate successful startups from the potential failures.
To keep your startup on track:
- Learn to be agile, both in strategy and delivery – businesses that can’t react to change are at a disadvantage in the marketplace. Startups need to be agile, so you’re prepared to act fast when a new business direction is needed.
- Diversify to reduce your risk – relying on one core product, or one core industry can be a risk. If that market disappears, so will your only source of revenue. Diversifying into new products, new services or new sectors helps you lessen the risk and gives you multiple revenue streams to rely on – reducing the potential risk in your model.
- Get used to pivoting to new strategies – you might have very clear goals in your current business plan. But no plan is ever written in stone. You may well have to totally reevaluate your strategy and pivot in a new direction. This fluidity is a vital attribute for any new startup that doesn’t want to end up as one of the 9 in 10 failures.
HELP! I’ve Started A Business – your guide to the business journey
Still wondering if your business idea has legs? If you’re looking for more guidance on the startup journey, ‘HELP! I’ve Started A Business’ is the book you need for 2024!
‘HELP! I’ve Started A Business’ is your 101 guide to the entire business journey, from start to finish, with each chapter introducing you to a new step in your success story.
Find out how to:
- Get your startup off the ground,
- Put down stable roots as an established business
- Scale up your enterprise and achieve hypergrowth
- Add value to the business and create a legacy
- Sell up or exit the business at the end of the journey
Do yourself a favour and buy ‘HELP! I’ve Started A Business’ today – and start the new year with the best possible guidance and business hacks for your new enterprise.
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