Tonnes of businesses fail within the first few years. Depending on the industry, some might not even last a year. No one sets out to fail, but you could find that you struggle to keep your business afloat if you’re not careful. If you want to avoid your new business failing in the first few years after you launch, you need to understand what to do right and what you could end up doing wrong. There are some sensible rules that you can follow while you try to grow your business that will help you to stay on track.
Have a Comprehensive Business Plan
Some business owners just try to wing it when it comes to growing their business. They have a business idea and a vague plan, and they think that’s enough. However, if you don’t have a solid plan, you could end up drifting aimlessly. You need to have a clear, detailed business plan if you want to be able to focus on growing your business and making sure it will survive. Your plan needs to set out what your goals are and how you’re going to achieve them. Once you’ve written a plan, you can still change it. It doesn’t have to be set in stone, so don’t worry if you need to adjust it.
Don’t Try to Grow Too Quickly
Attempting to expand your business too rapidly could be one of the main reasons your business fails. Some businesses start to grow quickly on their own, but there are other occasions when business owners push too hard to try and obtain rapid growth. If you try to grow your business faster than is really sensible, everything could end up collapsing. You can be ambitious, but it’s important to avoid being too ambitious. Growing your business can be expensive, and you don’t want to end up with a business that’s too big for you to handle or to afford.
Watch Your Cash Flow Carefully
Trying not to grow your business too quickly will help you to manage your cash flow more effectively. If you have too much money going out and not enough coming in at the right time, it could lead to the collapse of your business. In his Bayswater interview about his business, Arnold Kluck talks about the importance of simplicity for managing cash flow. The simpler you can keep your business, the easier it is to manage your cash flow. Keeping your costs down makes it easier to balance your expenses and income. It’s essential to avoid spending more than you’re making.
Avoid Too Much Debt
Borrowing money can help you grow your business. It gives you the assistance you need to move things a bit faster and can work out if you’re confident you can make your repayments on time. However, it’s not a good idea for new businesses to have too much debt. Using a business credit card might be a good idea, but it’s wise to avoid taking out large loads. You probably don’t need to purchase property, and you can put off buying other large assets until later too. You might need to have some debt, but make sure that it’s necessary.
Be Realistic
New business owners can often get ahead of themselves when they’re making plans. They’re excited about their business idea, and they’re sure it’s going to be a huge success. But this can lead to having a greater belief in the business’s potential than is realistic. While your business could become a huge success, you have to be careful not to get ahead of yourself. Don’t expect to become an overnight success – those businesses that do so have never literally appeared overnight. They have spent a long time growing before receiving any real attention. You have to expect to put a lot of work in and be aware of anything that could go wrong.
Build a Distinct Brand
Any successful business needs to be able to stand out. Not many companies have a truly unique product that’s nothing like anyone else’s. You need to find a way to distinguish your brand from others. Fortunately, there are plenty of ways to make your business unique and give it real value. You can do many things that make you different from other business doing similar things. For example, you might think about how you could deliver customer service in a distinct way. Maybe you’re so confident in your products that you’re willing to offer a lifetime guarantee. Perhaps you want to focus on the way you market your products in an honest and open way. There are many ways to make your business different.
Provide Strong Leadership
Everything starts at the top in business. Employees look to their management for guidance and to set the tone for working for the company. If you’re a new business owner, you might not have a lot of experience in being a leader, but you’ll need to learn quickly. Strong leadership is essential if you want your business to be a success. If you need help, then you need to find it. See if someone will mentor you, take a course, read some books and focus on learning about how to be a better leader. Decide what type of leader you want to be.
Understand Your Customers
It’s important to stay in touch with your customers and remain connected to what they want. You might think that because they’re already spending their money on your products and services, they will continue to do so. But their wants and needs can change, and an initial purchase doesn’t mean they will keep coming back. Make sure you collect feedback and respond to it where appropriate too. Customer relationship management software should help you to stay in touch with what your customers want. It gives you insight into what’s successful and where you might need to make improvements.
No one wants their business to fail, and especially not only a short time after launching it. If you want to be successful, it’s important to be cautious.
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To your success,
Vinh Van Lam & Stuart Horrex
Your Creative Coaches @ CoSydney & ArtSHINE industries
