Starting a business is a tough gig. How tough it is it is up to you. 50% of start-up businesses fail within 5 years. How do you avoid this? It’s simpler than you’d think. We’ve picked out four essential tips from Innovate UK that give your business a chance to succeed where others fail.
1) Evaluate your idea
It isn’t enough to ask your friends and family whether they think your idea is any good, you must evaluate it objectively. Be honest and ask yourself the following questions:
• Does your service/product satisfy a need or solve a problem?
• Is it disruptive?
• Can you monetise it?
• Can you identify at least 1 unique selling point?
If you can’t answer these questions positively and without difficulty, then you might not have a viable business.
2) Do your research
It’s important to do your research before starting a business. Going into a market blindly is a quick route to failure. You must understand your demographic and niche market, consider whether they will actually pay for your service or product. It’s important to know the shape of your sector too; if it’s in decline then maybe you should reconsider, if it’s on the up then look at who else will be likely to enter it. What does your competition look like? Don’t just think about your direct competition, look at what indirect competition you may have too. When looking at your competition, be sure to deliberate whether your price points are realistic in comparison.
3) Build your dream team
When your business is in its early days of trading, there’ll come a point when you realise that you can’t do everything yourself. It’s at this time that you’ll need to consider building a team. Firstly, think about the structure and hierarchy of your company. You’ll need to adapt your hiring techniques based on whether you seek a co-founder or employees. You may even find that it’s easier to outsource some of the workload. The team you assemble at the beginning of your time in business will play an important part in the overall success of your company. You’ll need enthusiastic, creative, reliable and ambitious people who can help plan and execute your business strategy precisely.
4) Create a long-term financial plan
This sounds obvious but you’ll be surprised by how many start-ups fail as a direct result of not possessing a thorough financial plan. By plotting your long term finances, you can avoid any nasty surprises. You can also be wary of when you’ll actually run out of money, require further investment and hopefully start making revenue. Don’t forget to factor in production and staffing costs, especially if you’re looking to take on further employees. You should always be realistic of the demand you’ll receive in the early days and be mindful that turnover is very different to profit.