Starting a new business is a daunting prospect. The majority of startups fail – but with the right preparation and some forward thinking you can give yourself the best possible chance of success.
We have compiled a list of some of the biggest mistakes a new business can make, in order to help you get off on the right foot.
1. You haven’t worked out your purpose
It sounds unlikely, but all too frequently businesses start without their founder having a good enough idea about what they will actually do. If you can’t explain in a couple of sentences what your business offers and how it will make money, you need to go back to the drawing board. Without this clear sense of your business’s purpose, you will be left listing. Try explaining your business to people who have no previous knowledge of your idea or your industry. If you can make clear to them what you are doing in a concise manner, you are on the right track.
2. You haven’t budgeted properly
Startups are faced with unique funding challenges in the current environment. Bank finance is particularly difficult to come by and, although alternative finance methods such as crowdfunding and invoice finance have grown in popularity, many small firms find it increasingly difficult to get the cash that they need. We have compiled a comprehensive small business finance guide to help you raise funding – but wherever you get your cash from, it is vital that you properly budget. You need to be honest with yourself about your needs, and you need to be absolutely certain that your financial forecasts are watertight.
3. You haven’t made a plan
Those forecasts should form a cornerstone of your overarching business plan. It is absolutely vital that you build a strong plan, not only for the purpose of raising funding, but also for the sake of your own internal practices. Your business plan should be your guiding document; it should set out how your business will operate, and should give you the flexibility to respond to changing circumstances quickly and agilely. There is a range of templates for building a business plan available on the internet, including from many of the major High Street banks.
4. You don’t know your customers
If you are to provide your customers with great products or services, it is vital that you understand them and their needs. Customer research should be one of your major priorities. You should try to build a series of customer profiles. Who is buying your products or services, and who are you targeting? This will require you to conduct market research, which should be another of the most important elements of your business plan. You might choose to do both qualitative and quantitative research in order to give you the best possible picture of the people you are trying to reach.
5. You’re not preparing for growth
Finally, you should remember that everything goes well your business will grow – and this requires you to plan ahead. Unexpected and sudden growth can be enough to derail an otherwise viable business, and it is important that you safeguard against this. You need to have contingency plans in place. Are your suppliers able to deal with spikes in demand? Do you have a ‘slush fund’ that will enable you to meet increased demand if necessary? Do you have the expertise that you need to help you scale quickly? By addressing these concerns now you can help to ensure that you are not pushed off track by growth.