Becoming your own boss means greater job satisfaction, a sense of personal fulfilment, and the freedom to set your own schedule.
Small businesses (employing fewer than 50 people) in the UK totalled almost 5.5 million at the start of 2022 – 99.2 percent of the total business population.
But along with the rewards of starting your own business come many challenges.
- Twenty percent of small businesses fail in the first 12 months.
- Three in five small businesses collapse within their first three years.
Many problems encountered by new businesses can be overcome by solid planning and preparation. This will also help you continue to prosper in the future.
Here are some ideas on how to survive those critical first few years in business.
Create a business plan
You’ve done some research and think there’s a demand for your products or services, so you’re all set to launch your business. Well, maybe not.
In your eagerness to get your business up and running, it may be tempting to skip the step of creating a written business plan. This could be a mistake.
A business plan will give you an important blueprint to start, grow and develop your business. This will help you overcome many of the problems typically faced in the first few years of a new business.
Your business plan should be designed to steer you through each stage of structuring, running and growing your business.
The process of creating a business plan will also help you focus on your goals and allow you to think through the details of the key aspects of how to manage your business.
Having a business plan may also help you attract investors or get a business loan.
Common components of a good business plan include:
- Business description.
- Products or services.
- Cash flow predictions.
- Marketing strategy.
- Identification of competitors.
- Financial forecasts for the future.
- Sales goals.
- Expense budgets.
Learn how to run a business
Many businesses fail within a few years because the owners are unprepared for the complexities of running a business.
You have to find a balance between pursuing your dream and managing vital business operations. And you’ll need to wear many hats.
When you start your business, you’ll likely be running the whole show yourself, maybe with the help of family members or a small number of part-time staff to help you get your venture off the ground.
This means you need to be ready to master a variety of skills that may not currently be within your areas of expertise – general admin like keeping business accounts, plus marketing and social media, for example.
If you later hire staff, you’ll also have the challenges of overseeing them and managing an employee payroll.
In other words, you’ll have a lot more on your plate than when you were working for someone else.
It’s essential to be decisive and avoid the panic of uncertainty as you take on these new responsibilities.
Give yourself time to learn new skills but be prepared to take direct action such as investing in training for yourself, finding technology that can help, or outsourcing some of the work.
Tips for making your business a success
All your planning and preparation will equip you to cope better with common issues behind the failure of new small businesses – problems intensified by high inflation, supply chain issues, and soaring energy prices.
Here are a few tips for business success.
Embrace digital marketing
Breaking into a competitive market is difficult. Your potential customers are likely already being catered for. You can help make your business stand out from the crowd by taking advantage of the digital world.
Online marketing allows a small business to compete with even large corporations on a more level playing field for free or at little cost. Organic social media marketing, for instance, provides a handy way to establish and sustain a solid digital presence.
Build your reputation
Being a small business doesn’t stop you from becoming a big name in your local community by building an impressive reputation.
Use your online presence to collect customer feedback and reviews and respond to them. While word of mouth is still important for your reputation, online reviews of your business reach out to far more potential customers and are crucial in the trust-building process.
Provide outstanding customer service
Ninety percent of consumers take into account customer service when deciding whether to do business with a company.
As a small business, you can develop a stronger, more personal relationship with your customers. If you provide a high level of service they can’t get from a larger business, they’re likely to stick with you, even if it costs them a little more.
Know the competition
Establish who your competitors are and what they’re offering. Determining their strengths and weaknesses will help you set your business apart.
Take steps to improve your performance where other businesses are doing better than you. Where the competition is weaker, figure out how to leverage maximum advantage.
Looking to the future
Millions of individuals bored with nine-to-five monotony and seeking a new challenge pursue the dream and rewards of self-employment.
For some, that dream will turn into a nightmare, and the first year of running your business is likely to be the hardest, with many obstacles to overcome as you try to get to grips with matters such as money management, financing and taxes.
Having a sound business plan and developing key business skills is crucial to surviving your first few years in business, but you also need to pave the way for continued success.
Above all, you’ll need to ensure sufficient working capital to keep your business on track and free up money for investment.
This is critical to long-term success, and after a few years many small businesses are in a position to access business loans to provide the funding they need to balance the cost of running their company with unlocking investment for growth.