It’s no secret that most new businesses fail. For budding entrepreneurs, the statistics make for terrifying reading, but there are ways of steering clear of trouble. If the waters get choppy, it’s essential to be able to steady the ship and stay afloat, and one of the best ways of doing this is to make sure you’re aware of potential risks. If you know there are icebergs out there, you can take steps to avoid them. Here are some common problems faced by fledgling companies, and some tips to help you keep your head above water.
Cash flow
Cash flow issues are the most common cause of startup failure. If you’re launching a new business, or you’re in the early stages, never underestimate the importance of keeping a close eye on your books, and ensuring you know how you’re going to finance the project. Going into business isn’t just about getting a venture up and running. You’ll need to continue funding your business until you’re turning over profits, and this can take a while. Figure out how you’re going to finance every stage of growth, from conception to expansion, and make sure you have a firm grip on spending.
Look at your books on a regular basis, plan ahead, and put money aside if you’re able to. Having a contingency fund will come in handy if your cash supply does start to run low. If you find yourself in a situation where you need money quickly, there are options out there, so try not to panic. Look at online loans, or try and free up some cash from your savings accounts if you have them. Chase outstanding payments, and specify a deadline for every client you work with. If you’re owed money, and this means that you can’t cover bills or pay staff or suppliers, you’re not going to last long. It’s particularly important to monitor cash flow if you have a seasonal business. If you tend to get really busy in the run-up to Christmas or during the summer months, you need to ensure that you budget for the quieter periods.
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Inexperience
Running a business is no simple task. When you own a company, you take on a range of roles, many of which may not suit your skill set. If you’re not experienced in core aspects of business management, don’t hesitate to seek advice. Not every budding mogul will be knowledgeable with all the legal processes involved in setting up a company or the latest marketing methods. It’s better to ask for advice or to work with external agencies than to have a go and hope for the best.
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Ineffective marketing
You could sell the best products or services in the world, but if you can’t market your business effectively, you’re going to struggle to make it to the top. Marketing is crucial to boost profits and expand your client base. If you don’t have a marketing strategy up and running yet, or your campaigns are falling flat, it’s wise to focus on creating plans that are guaranteed to put your brand on the map. Research the market, get to know your customer, and utilize methods and platforms that are going to target the right buyers. Up-sell your USP, be original, and make use of customer feedback. If you don’t know the first thing about SEO or you have no idea how to design a website, it’s wise to look for digital marketing and web design agencies that have experience in your sector. An effective marketing campaign can make all the difference to your profits.
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Customer engagement
Do you feel like you know your customers well? If there’s a disconnect, you might find that your clients start to look elsewhere. It’s so important for modern businesses to engage with their customers and to strive for approval. Buyers read reviews, they take recommendations from friends on board, and they judge businesses based on the service they receive. Make an effort to communicate with your clients, reach out to them, and invite them to share opinions and leave feedback. Listen to what your customers say about the services and products you offer, and be more sociable. In this day and age, with social media and features like live chat, it’s easier than ever before to form relationships with your clients. Leave a suggestions box at reception, email surveys and questionnaires, respond to comments on social media posts, and encourage conversation. Always put yourself in your customer’s shoes, and work on continual improvement.
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Leading by example
In many cases, businesses fail as a result of a lack of strong leadership. If you’re in charge of the wheel, you need to be decisive, assertive, and confident in your abilities to lead your team. If you’re not a natural leader, and you’re not comfortable with this position, perfect the art of delegation, and make sure your employees have line managers or team leaders to report to. Ensure that you are clear about what you want, outline your objectives, and set realistic targets. Even if you’re not in charge of the day to day management of the shop floor or the office, you should strive to ensure that the people who work for you know how passionate you are about the company. If you put 100% into your job, and you’re driven, your employees should follow suit. Work on creating a positive, productive working environment, and don’t lose sight of the importance of morale.
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It’s no secret that running a successful business isn’t always easy sailing. There are many obstacles out there that can dent your progress and even send you under. Being aware of risks and planning in advance can help you reduce the impact of unexpected problems and ensure you’re able to react quickly if things don’t go to plan. Keep a close eye on the books from day one, don’t hesitate to seek expert advice, and work on designing and implementing a targeted marketing strategy. Lead by example, don’t be afraid to delegate if management isn’t your forte and make a concerted effort to engage with your customers and keep channels of communication open.