Record numbers of businesses are being started in the UK but half fail within 5 years. Find out what you can do to give your start up the best chance of success.
2014 was a bumper year for new business startups in the UK, with a record breaking 581,173 businesses being registered with Companies House. But with half of new UK businesses failing within their first five years, what can you do to give your business the best chance of success? The Forum’s Managing Director, Ian Cass, gives his top tips for starting up successfully.
Starting your own business is without doubt an attractive option to many. The latest government research suggests that the main motivations for pursuing the entrepreneurial good life are the need for extra income (42%), having greater independence (29%) and being your own boss (25%).
These are all great reasons, and ones that I understand myself having set up my own businesses. But they should come with a healthy portion of reality. By focusing on these five key areas, you will give your chances of startup success a boost.
1. Make a business plan and follow it
Making a plan will focus your mind on what steps you need to take to make your business idea a reality. For example, do you need planning permission, extra capital etc?
It will also help you decide what you don’t need to do, saving you precious time and money. Once you’re happy get an expert to look at it to make sure it’s realistic.
2. Cash flow is king
If you haven’t included cash flow in your business plan, this is a must. You should also keep your cash flow updated to let you assess seasonal information and give you an idea of how much you can spend and where.
Create a system to make payment easy. Get deposits or partial payment up front and have a system in place for invoicing clients and following up with late payers.
If you’re running on a shoestring budget, do as much as you can yourself. Time and passion are big advantages that smaller firms have.
And finally, remember to keep back money for HMRC – delayed payment or non-payment increases the chance of a tax investigation.
3. Surround yourself with good people
One place where it pays not to scrimp is on advice. There are four key sources of guidance all businesses will rely on.
- Your accountant understands your money and can advise on company structure, what you can claim back, the structure of the business and when you need to register for VAT.
- A solicitor can make sure contractual information is correct and give specialist legal advice.
- It is also worth exploring trade associations, like the Forum, who as well as providing insurance that will cover your legal fees in the case of a tax, employment or health and safety dispute, they can also keep you up to date with business law changes before they happen and provide advice and guides on compliance. Taking this kind of advice can avoid the need for things to even get to the stage of using a solicitor.
- Also, don’t forget to tap into your local business network. Your fellow business owners are a gateway to referrals and opportunities for collaboration.
Success is the result of knowledge, knowledge the result of experience, and experience the result of trying lots of stuff with mixed results. Don’t be afraid to experiment, but make sure you measure what works and learn from what doesn’t.
Social media is a fantastic way to speak to your customers, get testimonials and to broadcast offers but you should also make it easy for people to recommend you and incentivise feedback. Use this feedback to create case studies for future marketing campaigns. Of course not all feedback will be positive, so take any negative feedback offline and never react in anger!
PR is crucial particularly for businesses where location is important. Local PR firms tend to have the best contacts with local papers.
5. Be yourself
For many small businesses YOU are the brand. Storytelling is important for customers to buy into you and why you’re running your business is the biggest part of this.
Having the belief in what you are doing and a desire to succeed in the face of adversity goes a long way, but be sure to make sure you have a good work life balance, otherwise the business will not be sustainable.
And finally be prepared to learn; on the job, online (TED talks are great inspiration!) from books and your peers.
To find out how the Forum can help you get the basics in place when starting your business, or for help with growing your business, call us on 01565 626 001 or join now.
Source: Figures from StartUp Britain, January 2015 and BIS Understanding Motivations for Entrepreneurship, March 2015