Daniele Moore, Communications and Marketing Manager from AD:VENTURE, provides some tips on how to get your business to its 12-month milestone.
What is it that makes a new business succeed?
I’ve worked with start-ups and new business owners for almost ten years, and this is a question I’ve been asked many times.
Firstly, I can tell you there is no magic answer to this (If there was, this blog would be a lot shorter, and everyone would have their own successful business already!)
Each business and owner will have their own journey and experience. All are very different and the reasons they succeed and fail also differ.
The reasons we start businesses are many. It might be a passion for a product or service. You’ve spotted a gap in the market and see an opportunity, or you could be looking for a better work life balance and want to have more control over your own working life.
Whether you are looking to start a business and build a team, scale up and achieve global domination or you are looking to pursue a passion that will give you a sustainable income and security, the principles for starting your business on the strongest footing are ultimately the same.
What we do know is starting up takes commitment, passion and tenacity.
Did you know research shows 21.5% of start-ups fail in the first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year?
Failure reasons vary as much as the successes do, but there is a lot of research and evidence to show that the top reasons for business failure are quite consistent. Research conducted by CB Insights in August 2021 shares the failure reason cited by over 100 founders.
From experience I know the amount of information you can be faced with at the start of your business owner journey can be a little overwhelming.
To help you in your early stages of your business journey, here is a 6-step summary to ensure you reach that very important 1st business birthday!
Plus, a few hints at the end on where you can get help and support along the way.
Planning the Plan!
You have the idea; you have the passion. Now you need a plan. Pretty obvious right?
Maybe so – But what I am asked most here is: Where do I begin!
Writing a business plan can feel daunting. Particularly when you are being asked to think about areas you may not have expertise in. Believe me, I have spoken to people with years of industry and management expertise who have shuddered at the thought of writing their business plan. It sounds big just saying it, and when you start looking at all the sections that are recommended, it can start to seem like a mountain to climb! But don’t worry, it’s not hard to do, and I guarantee you’ll be glad that you did.
The first thing your business plan should do is set out for you exactly what your business does and who for (If you haven’t validated your business idea, then you need to go back to basics before you even begin to plan!).
You plan is pretty much your businesses roadmap – Underpinning what you are setting out to do, and how you will achieve it.
Throughout your business’s life, your business plan will be used for many things, so consider making sure it’s adaptable and is broken into sections that are easily edited as it can be something you can tailor for different needs.
For example, what you might need to use to pitch for investment, could be very different to what you might present to a bank or start up loan provider.
How can you create a plan that works for you and your business?
Think of it like a CV for your business, it will evolve and change over time, and you will remove or update elements that no longer apply and add ones that do (It’s also a great way for you to look back as a business owner at the different stages of your business!)
Bearing that in mind, it then becomes easier to break it down and see your plan as something that describes all the elements of your business. Something like building blocks, rather than a huge document you will never read again. Bigger is NOT always better!
To get you started here are some common elements of a business plan – Each is distinct, but many will link into each other.
- Executive summary
- Company description
- Market research
- Competitive analysis (SWOT)
- The product or service
- Marketing and sales strategy
- Business financials / forecast
Then finally – The ask. Dependant on why you are sharing your plan, this might be where you add a section about the finance or funding you are asking for and how this will impact your business.
You can get help on all these aspects of a business plan, from value proposition to forecasting and in many cases that practical support is fully funded, which means free to you the business owner! (Links to support at the end of the blog)
Perfect that pitch!
You might only have a few seconds to impress, and as a new business owner you haven’t got a sales team to do that for you – so it’s important you have considered what you are saying about you and your business to prospective buyers, investors, or funders.
Be clear on your USP (Unique selling point) and what problem your business offers to your customer.
If your business offers complex solutions, that’s fine, but you can still make it simple for your customers to understand what you do (and why they should buy from you!)
You can access advice and support on how to do this. Here at AD:VENTURE we put on webinars and workshops that help new business owners to focus on areas of the business where they need support, and one of these is specifically focussed on helping you pitch the business to generate sales.
Surround yourself with positive people
In the early stages of your business, the “Team” is likely to be small. It could be one person, or a couple of co-founders. And you’ll have a lot do.
The most successful business founders surround themselves with people who can do things they cannot. If you’re looking to build a team, look to find people with different strengths who can add to your skillsets. More heads are always better than one, and whether this is about building your founding team, or recruiting to the business – It’s important that you have a mix of people and skills who can add value to your vision.
Building your networks is another crucial element of building your business.
In the early days, you can find other founders who are going through the same journey. You can support each other and learn from common mistakes. Making sure you know your networks and what they can offer can be an excellent way to save time and money.
And people want to help! You’ll be surprised at how many people are willing to give you some of their time freely to offer advice or make that much needed connection. To make the best of your networks, also offer something back. Thank people for their help, you never know when you might need them again.
I also know of many new businesses who have teamed up with others to deliver larger projects or bring in skills needed to bag that sought after contract. It’s worth being aware of what your networks can offer!
Choosing where you decide to base the business can also play a big part in a new business’s growth. Shared and collaborative workspaces are great for start-ups. For example, the 3M BIC in Huddersfield offers a huge variety of support options, collaboration opportunities and much more as part of their office package.
It can be lonely starting a business, and the more people you surround yourself with, the easier and happier a journey it will be.
Be prepared for change
Yes – I know we have heard this word a lot in the last few years and have all learned the lessons of being prepared for change after Covid 19. But being adaptable, being aware of your environment and the business and industry landscape has always been an essential aspect of starting and running a successful business.
You need to know when the market might change. What legislation changes could affect your business; what economic impacts might affect your sales.
Monitor your competitors regularly. Keep an eye on what they are doing (and why!) What are they doing well? What do you do better? It isn’t about having an answer for everything, it’s simply about being mindful of the landscape you are in and making changes to adjust to your customers’ demands.
Simply put – Don’t be the one who follows the once great Blockbusters down the blinkered path. Scan that horizon!
Know your business!
And by this, I mean your financials. Another common reason for start-ups failure is mismanagement of cash flow. It’s not necessary because they didn’t have the cash, but if the cash isn’t flowing, it soon gets very tricky.
Turnover isn’t profit, and you should have a clear idea of what you need to bring in to cover your costs, and turn revenue generated into actual profits.
When you are starting up, of course you are forecasting based on your best estimations of where cash will come from. But do make sure the costs of the business are accurate. Do not underestimate how much you need to keep the business turning over.
Get advice on your products and pricing – Are you sure you are charging right for the services you deliver?
Sales forecasts are forecasts, but again, they should be based on reality and linked to tangible actions.
If you set unrealistic sales figures, you are setting yourself to fail. Base it on fact and on genuine anticipated sales.
I hope you’ve found these tips helpful, and they have given you some food for thought. If you are in the early stages of starting your new business adventure, then you should look at what support and help is available for you.
Did you know there are support programmes locally that can offer practical hands-on help to get your foundations right at the beginning, and who can also help you and work with you as you move your business long is journey to maturity?
Here are a few organisations worth checking out in our region:
Dependant on your business and its ambitions, there are many programmes, networks and groups who can help.
So don’t go it alone – Reach out for help.
Guest Blog by AD:VENTURE