6 Small Business Tips for Bucking the Failure Rate

6 Small Business Tips for Bucking the Failure Rate

Starting a company is no walk in the park. It requires dedication, hard work and strategic planning to succeed. Furthermore, studies have concluded that many small businesses will fail within the first two years and some within five years. While daunting to hear, this hasn’t be so. Here are 6 small business tips for bucking the failure rate.

1. Begin with a problem, instead of a solution

The number one issue on CBInsight’s list was “no market need,” with a massive 42% of small business failures cited this as the reason why they failed. What this shows is that way too many entrepreneurs attempt to launch a service or product without establishing first whether or not there is a target audience that wants their product or service and that is actually willing to pay for it.

To develop a new business idea, finding out what people actually want and need is the best place to get started. Get out there, speak with prospective customers, and really listen to what people are saying. What are they frustrated about? What prevents them from being able to get the job done, consumes their resources, or wastes their time?

You will know what the market need is once you know what the problem is – then you can determine how it needs to be solved.

2. Keep your cash flowing

Turnover is not the same thing as liquidity. And even the most profitable small business can end up failing by lack of cash. Small businesses are very vulnerable to problems such as cash flow fluctuations or bad debts, so it is critical for your working capital to have a buffer.

It isn’t always as tricky to get funding for a small business as it may sound. The days are gone where you go cap-in-hand to the high-street banks – you can find numerous alternative lenders by doing a quick online search that has a higher appetite for risk, and are positioned well to provide small businesses with loans (of course, at higher interest rates).

Shaun McGowan, from the small business loans provider Unsecured Business Loans, says with advanced scoring matrix’s and financial intelligence, they can get a customer approved and funded within 72 hours. That kind of speed enables their customers to take advance of opportunities as they become available.

Before diving into a financial arrangement make sure you know who you are dealing with, what exactly you will be paying, what are the terms and conditions, and make sure your shop around and get professional advice if you have any doubts.

3. Build your dream team

To have a good business you must have good teamwork. All successful entrepreneurs have one thing in common, they are surrounded by excellent people who have strengths that complement with theirs.

In addition to having the specific expertise you may need for delivering your service or developing your product, there are also some core skills that all businesses need: business strategy, marketing, and financial management. If you don’t have those, you won’t have a very good chance to transform your great idea into a business that is viable.

When you start to build your team search for people who have the same passion and vision that you do, and who have expertise in those areas that you don’t have.

There is a ton of free resources and advice to help you get off to a good start at the Australian Government Small Business website.

4. Get quality Advisors

It doesn’t matter how strong of a management team that you have, you still need to have lots of expert advice when you are starting your business.

When you engage a supportive and strong professional advisor team (e.g. business mentors, lawyer, accountants) you can ensure that you are doing everything you are supposed to do in order to meet all of your financial, legal, and regulatory obligations – to allow you to work on your core business.

5. Start to walk before you start running

Another fatal mistake that many small businesses make is attempting to do way too much, too quickly. Your priorities during the early stages should be to establish your place in the market, earn your customers loyalty and build your reputation.

This means meeting the core need of your customers in the most effective and simplest way that you possibly can. All of that fancy functionality you can do later on after people recognise the value of everything you can do for them.

The national expansion and posh offices can also be followed after you have a viable business going that has a solid trading history.

6. Be prepared to pivot

When it comes to business these days, there is just one thing that you can be certain about: nothing is certain. Every day there are disruptive businesses cropping up, to turn traditional business models completely on their heads. So the most valuable of all survival traits that any business owner can have is agility.

Don’t ever stop listening to what your customers are saying, watch your market closely, and keep a close eye on emerging technology and your competitors – and be prepared to respond and change based on swift changes in direction and innovative new ideas.