We spend most of our adult lives at work, so sometimes it can feel as though people who start their own businesses have found a magic trick to enjoying their professional lives. However, studies show that around 20% of new businesses fail in the first year and around 50% fail within the first few years.
The reason companies fail is often because they go into business without knowing the basic fundamentals of how to run a business—it’s easy to get blinded by your vision for a product or dive right into the “fun” stuff, like package design. But if you’re considering taking control of your career and starting a business, follow these eight tips to get solid footing as you begin.
- Write a strong business plan
A business plan helps you organise your thoughts and ideas into actionable tasks. It should include an overview of your company, assets, marketing, how you will address problems, and your finances. Treat your business plan as sacrosanct, and teach any partners to do the same. Refer to it, update it and continue to build it.
- Write a 5-year plan
When you start a business, you need a goal and a vision of how to achieve your goals. By all means think big, but understand your ultimate goal may not be reached within the first few months, or even the first few years. Therefore you need to break targets down into yearly and monthly bites that are measurable and achievable. Five years in a reasonable time period to envision. You can then break this down into months, year by year, so that your tasks are bite-sized and achievable.
- Know your market
For your business to be profitable, you have to know how to sell your product or service. To do this you need to analyse the market so you know who your audience is and where to find them. How will you attract your audience? You also need to know who your competitors are and what they are doing. How can you make your business better? What do you have that will make prospects choose you over your competitors?
- Be economical
You will be on a budget, so don’t overspend on things you do not need. There is no shame in starting out with the basics and building your business gradually—no need to invest in fancy office spaces or top-of-the-line software from day one. If possible, avoid bank loans or other high-interest loans.
- Employee trustworthy people
If your business needs employees, you need to be assured that you trust the people you are working with. Can they fulfil their role diligently and help to make the company profitable? If the answer is no, their poor performance could be damaging to the business. You therefore have one of two choice; to train the employee so they perform better, or replace them.
- Don’t be afraid to make mistakes
Whilst you are finding your feet, be prepared to try new things and determine what works and what does not work. In which case, be prepared to fail. Some plans will not work out and you will have to try another way, so when things do go wrong, don’t give up.
- Take care of legalities
There are certain legal formalities you have to follow when you set up a business. You must register with HMRC for tax purposes, and Companies House to register your business name. You may also need a permit, or license, possible even planning permission to expand your premises.
- Keep it simple
Finally, keep things simple. Setting up a business can be overwhelming, so keep your tasks as simple as possible to start with. Don’t overcomplicate matters by trying to do too much at any one time, as you invariably get few things done. By putting your “things to do” into a realistic work schedule that can be achieved on a daily basis, you will eventually tick everything off your list.
Setting up your own business is an exciting time in your life, but it can also be stressful, time consuming and overwhelming. Good planning and a little patience will help you manage your time and relieve you from stress.