Did you know referred customers are more profitable and more loyal than normal customers? Research1 shows these customers are more...
Believe it or not, this is the number one reason why most people never get around to it.
It’s true, recent studies show that most people prefer a steady income over the daunting prospect of generating their own income. What’s more, starting a business is a costly venture and accompanied by an incredibly high rate of failure in Australia. In fact, according to the Australian Bureau of Statistics, more than sixty percent of new businesses fail within the first three years of operation in Australia.
But what can you do to improve your chances of success?
Here are five tips for starting a business:
Top 5 Tips When Starting a Business
1. Research the Market and then Research Some More
Starting with a bad idea is a common reason why many businesses will fail.
Now, that’s not to say the product or service is ‘bad’ but rather to highlight the importance of research. After all, there is little point entering a market in which there is already a sufficient supply of whatever product or service you might have in mind. Similarly, if there is nothing distinctly different about this offering, it’s often best to invest your time and effort in an alternative idea.
For this reason, market research is essential. More specifically, you need to know the competition and understand every aspect of the product or service before entering a particular market.
2. Track the Cash Flow with Great Detail
Lack of capital is one of the main reasons why businesses struggle so much in the beginning. That is to say, without sufficient funding, many businesses run out of money and cease to exist.
Think about it; suppliers, employees and overheads all need to be paid and needless to say, this requires a steady income and reliable cash flow. Also, it often happens that clients are slow to pay invoices or unexpected taxes strike a dent in whatever funding you have and these incidents are more than a blip on the radar for new businesses.
Tracking the cash flow of your business with detailed spreadsheets is essential. At the very least, this tracking should prevent overspending and you can use these reports to cut more costs on a weekly basis.
3. Be Careful About Growing Too Quickly
Managing growth can seem like a fantastic ‘problem’ but the truth is, growing too quickly can also be the downfall of the business.
For example, as sales and profits continue to grow, most businesses take on more staff and often upgrade certain aspects of the company. Whether this relates to a new office lease or placing larger orders with suppliers, the end result is always an increase in terms of expenses. While this might seem like a non-issue, quiet periods and the loss of major clients can leave the business with a very serious deficit.
Now, every situation is different but as a rule, business owners can reduce the risk of this happening by holding off when it comes to taking on more staff and making up for this by working longer hours. Of course, stress and responsibility are sure to increase but stretching your resources is always a wise move.
4. But Be Equally Cautious About Moving Too Slowly
As already mentioned, lack of funding is one of the main reasons behind stress in a new business. While initial costs can seem like the main downfall in this regard, there is also the risk of running out of time.
In other words, many businesses take far too long when it comes to putting their product or service on the market. Whether this is die to testing, procrastination or planning, the business will often run out of funds and time to continue with the project.
Minimum Viable Product (MVP) refers to the simplest form of a product or service that you can create. Quite often, this is the best way to initiate a business and a great means of gauging the market response. At the same time, getting the product out there is likely to advance the process and ensure the business is less likely to run out of time or money.
5. Seek Advice to Ensure the Best Possible Chance of Success
As you know, many people are either afraid or ignorant in terms of asking for help and when it comes to a business, there is simply no room for either of the above.
The truth is, you can find endless resources and information online but there is no substitute for sitting down with an expert who can show you how to bring everything together. With this in mind, whether you are doing something wrong or need to fix any aspect of the business, you always have the necessary support to give the business the best possible chance of success.