Now more than ever, starting and running a business has become quite appealing, as many people strive to be entrepreneurs. However, what nobody tells you about running a start-up business is that 60% of start-ups will go bust in their first three years1. In fact, many businesses do not even survive after the first year. Data from the U.S Bureau of Labour Statistics shows that only 25% of new businesses make it to 15 years or more.
This definitely doesn’t sound glamorous.
So, understanding why this happens, and how you can prevent it from happening to your business is essential to the success of your start-up.
Before you do anything else – do your market research. This is not negotiable at all. Do not start your business just because you want to, look at the needs around you; study them and understand how you can fill in the gap. It is easier and profitable to satisfy a need that is already existing. This is the best hack for sustainability.
The most common reasons for business failure within the first year are: lack of funding, inadequate management, a faulty business model, and ineffective marketing strategies2.
Just as the Bible says in Luke 14:28, “For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it?”
The issue of funding is a strong determinant of the success of your business. You must make sure you have enough finances to comfortably sail your business for at least a year or two. This will remove undue pressure to amass profit, and instead focus on building sustainability and providing solutions.
Management cannot be over-emphasized. Let’s assume you have the funding your business needs, you’ll still need to have a strong management team that will be capable of overseeing business affairs and ensuring that the necessary standard is maintained. Bear in mind that capability is not in numbers alone.
You can advance effectively with a small team membership, then increase your team as your business expands.
Take a good look at your business model and request a friend, who is preferably in finance or business, to take a look at it. This is to ensure that there are no errors, or at the very least, minimal ones. If you can, engage the services of a consultant to go through this with you. Your business model should be free of loopholes, as this can cause your business to crash even with good funding and management.
It is vital that you ensure your business model is well thought out and planned.
In today’s digital world, your business will not prevail without existing in the digital space. Devising efficient and effective marketing strategies will ensure that your business is always in the face of your target audience. This is not in an obtrusive kind of way though (I don’t want your business to be associated with negative feelings).
Your marketing strategies should simply consist of something memorable whenever your offered services appear, to keep your business in the forefront of your demographic’s mind. A digital marketer will do justice to this, so you should do your best to hire one.
As an individual whose business crashed after the first year, I wish someone had told me all of this valuable information sooner. Believe me, I would have prepared myself.
Why am I telling you this for free? I personally understand the desire for a start-up business to succeed and last over the years. So, taking this advice into account, I hope to boost your chances as much as possible.