New companies are being registered at a rate of over 70 per hour, which means that start-ups in the UK face fierce competition in their quest for success between 2019 and 2020, with over 660,000 new firms registered.
20 per cent of new businesses fail during the first year, and 60 per cent fail within the first three years, according to the Telegraph in 2019. A “failure post-mortem” is a report written by a company after it has failed intending to help future companies avoid the same pitfalls by explaining why it failed.
To identify the weak parts in your business model and take steps to strengthen them before your start-up joins the rising 60%, you must be familiar with the most typical setbacks and hurdles that new businesses face.
#1- Cement your vision
Entrepreneurs who don’t have a clear vision of where they want their firm to go might quickly lose their drive.
It’s not enough to merely describe your vision in a mission statement; you also need to spell out the steps necessary to get there, so you can track your progress along the way. You can then use your long-term plan to engage and unify all of your employees by having a clear vision of where you want to go and why you want to get there.
#2 – Take control of cash flow
One of the key causes for the demise of so many start-ups is a lack of sound financial preparation.
Why? Businesses in their infancy might look successful on paper. Still, money due is not the same as money in the bank, and the gap between the delivery of your product or service and the receiving of real payment can put you in a financially hazardous scenario.
It will be very difficult to build and scale your company or get further capital if you lack a strong cash flow and a clear understanding of your expenses. To avoid these problems, you should develop precise budgets and cash flow predictions, which will allow you to prepare for both the short and long term.
#3 – Build your brand and market your business
One cannot overestimate the significance of having a distinctive brand identity. Even though it should be a component of every new business’s vision from the beginning, this critical element is often overlooked by budding enterprises. To successfully reach your target market, you need to have a strong brand that conveys your company’s mission and values to your target audience.
Even if strong brand identity is what sets you apart from your competitors, if you don’t have a sound marketing plan in place, you’re doomed to fail. You may have the finest product or service on the market, but if you don’t properly promote it, you won’t be able to create leads, attract customers, and eventually close sales.
Whatever the size of the business, a company’s brand identification and marketing are equally important to its success. Even though start-ups generally have restricted finances, it is always detrimental to your organisation to eliminate or drastically reduce your marketing budget. As an alternative, consider low-cost methods of promoting your product or service or hire a marketing agency.
Regardless of how you choose to advertise your business, always have a plan and frequently assess your marketing activities to monitor their efficiency and guarantee that you are receiving a decent return on your marketing investment.
#4 – Hire the right people
Early on, a company’s success is its ability to attract the proper employees. Knowing exactly who you want on your team is thus critical. A careful approach to your initial recruits may save you time and money in the long term, especially when you have a restricted budget for employing new staff members.
If you don’t have the funds or revenue to support payroll, bringing in too many personnel at once might cause complications. Small, devoted teams are typically preferable in the firm’s early days since they may help you develop a great working culture that will pay rewards in recruiting later on.
Clear lines of communication with your workers may also help prevent high turnover rates by ensuring they know what is expected of them from the start and fostering a working culture that makes them feel appreciated and respected.
#5- Create a scalable business model
The growth that your company is not prepared for might be devastating if you don’t have the framework in place to support it. Every entrepreneur wants to expand their firm into something larger and better. However, even if you discover that your company is doing well, resist the urge to expand your operations without a strategy or a plan in place.
It’s never too early to start building the foundations for your company’s growth. You can prevent the hassle of having to play catch-up later on as your business grows by putting in place the proper processes and systems early on without compromising customer service or product delivery.
#6 – Never, never give up
Entrepreneurs must be resilient and willing to shift course when things aren’t going as planned while navigating the various hazards of starting a new firm. Finally, in the words of Winston Churchill, never, never, never give up.