There are more than ½ million new start-ups each year, with last year alone having a record number of 657,790, as found by the Centre for Entrepreneurs (CFE). However, shockingly, it is estimated that 1 in 5 of those will fail in the first year, and more than half will fail in the first 5 years.
Although there is a vast array of technology available to aid drive, business performance and scale, the same re-occurring barriers are the ones taking their small business victims.
Running out of money – Cashflow
As with all small businesses, whether established or new, there is a huge focus on accelerating business growth, and finding your first of many new clients. However, the need to win at all costs can have detrimental impact on various aspects of your business. This may include payment terms becoming longer than anticipated, margins not being maximised and project scope creeping wider, to name but a few. It is key for the longevity of your business to ensure that you are on top of increasing overheads, managing the flow of preferential credit and payment terms such that it benefits your business rather than your supplier. Having a positive cash-flow is the first barrier to smash.
Losing your best people
Staff retention is key to the success of any business, and being able to hold onto talented, committed people is no easy task. It can be especially difficult in growth markets where the potential rewards with a competitor may be highly attractive, making it vital to offer appealing package remuneration to aid staff retention. This could be achieved with share options, equity, bonuses, healthcare, pensions and more.
It may be prudent to consider other means of reward which are not just payment related, but also recognition. This may encourage your top staff to take on more challenging and exciting opportunities within the business and not look elsewhere.
With recruitment costs being an added expense for any company, retaining good people is key to building a solid foundation for your business. Having positive referrals from current staff and customers can also help to keep a healthy pipeline of talent, not only for today but also for future succession and expansion planning for your company. A solid recruitment and staff retention plan is key to ongoing success.
Not knowing your business
It goes without saying that knowing your numbers on your business is key to success. Also, being passionate about what you do and how you do it. The adage “the shoe maker should stick to making shoes” has never been so appropriate, and knowing your market, having the expertise around you as well as being tight in terms of knowing your daily business’s performance will be a step in the right direction to avoid the pitfalls. If you do not have all the answers, then take external advice from professionals who are experienced in your field to help make the right decisions on time consuming and complex areas like fundraising, intellectual property, and staff incentivisation.
Conquering these three barriers will help your business survive, and keeping to these business practices will in turn help your business thrive.