I’d like to start of saying the 3 out of 5 new businesses failing is a statistic I’ve read in an article, but have since seen various others quoting anything between 50% and 90% and while it is difficult to identify the precise statistic, it’s clear that the failure rate is high. I want to talk about some areas that new business owners often struggle with and the qualities they need to prosper.
Planning – This is a key area where small business owners often trip up, they get so involved in the day to day running that the forget to think about any risks and opportunities coming up in the future. Planning at its best will help business owners understand what their business needs and when it’s needed, staffing is a key example as it can take weeks to recruit so it has to start before they are actually needed. Businesses should have plans for all of the key areas they are involved in like customer service, internal marketing, external marketing, production, staffing, finance and purchasing. These plans can then be combined to understand how these different areas interact with each other.
Assumptions – The best business question I have ever been asked is what assumptions about my business are the most valuable to me and what would I do if they turned out not to be true? Some business owners are guilty of assuming they understand a particular market sector better than anyone else, but how can they take an independent view when they have so much at stake? The first step to reducing the risk relating to assumptions is to identify them and the part they play in your strategy, the next is to find ways to validate them by doing research or considering things from your customer’s point of view.
Process – MacDonald’s is the market leader when it comes to standardisation or in layman’s terms the ability to replicate a customer experience time after time regardless of where you are in the country. This is very important to customers as they generally prefer to use a business that is always consistently the same even if it’s average, rather than one that can be really good or really bad and in order to achieve this standardisation a business will need to create standard operating procedures (SOP’s) for the normal dealings with customers and the other activities it undertakes. One thing a successful business owner will recognise though is that if they want to a process for dealing with a 100 customers a day then they will need to start planning when they have 10 customers per day, it can be disastrous for a business owner to underestimate the time needed to create this kind of process especially when it comes to maintaining their reputation.
Marketing – New businesses are bombarded with offers from other businesses trying to sell them advertising space and services, the problem with this however can be that a new business can tear through their entire marketing budget very quickly without any real gain. Researching various advertising and marketing techniques is really important for a small business owner as not everything available will be appropriate for the client base they are trying to reach out to. Avoiding the urge to spend money straight away can also be helpful as it can often be the case that entrepreneurs don’t have enough experience until around 6 months in to make the best marketing decisions for their business.
Goodwill – Believe it or not there are still many businesses out there that don’t understand the importance of getting clients to trust and respect them, what can start with a refusal to provide a refund for poor service can quickly escalate into bad review throughout the internet and earning a reputation that can never recover. This is something that will affect every business owner at some point as no-one is perfect and mistakes can be made, however walking the fine line between being a pushover and understanding where a customer is genuinely disappointed and needs compensation can be one of the hardest skills for a small business owner to develop, it is also undoubtedly the most important.
Brand – It’s really important for start-up’s to establish whether they are trying to build a business around a business name or around a person and they need to do it sooner rather than later as it will impact their marketing decisions and their staffing structure. Either one has its advantages and drawbacks, however trying to do both can be a disaster as it will often appear bland and not engage any potential customers. The business also needs to be absolutely clear on the type of customers it wants and why it will be better for them than any of the competition, this is something that many new businesses fail to do and as a result just fade into the background and eventually fail.
As well as having one of the best business strategy qualifications out there, Northants Accounting are also entrepreneurs who have been through and survived the issues discussed in this article. This means that we are in an excellent position to help our clients based in and around Northampton to survive and prosper. Contact us today to find out how appointing us as your accountants could secure the future of your business.