As an aspiring entrepreneur the thought of starting up your new business is exciting, challenging and, nerve racking. You have the perfect business idea. You have identified a gap in the market, you have the skills and passion to differentiate yourselves from others. Now what?
The mechanics of setting up a business are fairly straightforward with thousands of people doing it every year, but 1 in 3 business start-ups fail in the first 3 years. How can you improve your chances of setting up and operating your business for long term success?
CMC Business Advisors since 1989 have successfully supported business owners, helping to realise their full business potential and helping to provide growth and exit strategy development.
Our partners have applied their years of business experience in setting up and growing businesses to develop these key tips to aid entrepreneurial long term success.
These tips will help avoid the common start-up pitfalls and achieve long term business success.
1. Get started, the finer details will develop
One of the most common mistakes made by first time start-up businesses is spending too much of their time pre-launch focussed on the intricacies of their product or service. This is both quite natural and understandable. After all, starting a new venture is a big step and it is important to get it right.
2. Talk to potential customers to gain valuable market research
We have often observed a reluctance by aspiring entrepreneurs to actually start talking to potential customers. Admittedly, this is a challenging step for people with a great business idea but who have little or only limited experience of selling. One consequence is an almost inevitable tendency to rely far too heavily on their own personal perspective. The alternative is to take a much more market-orientated view of the world – one that strives to put the needs of the customer right at the heart of the business. Adopting this approach means the sooner you engage with potential customers – ask questions, share your ideas, listen to their opinions and adjust your ideas in the light of market research the more robust your business plan is likely to be. As military strategy suggests “No battle plan survives contact with the enemy”.
3. Craft a clear value proposition to connect with your target audience
This is the clear articulation of why customers should choose your product or service rather than a competitors. Read more about why it’s so important here
4. Develop a structured business plan to take your business forward.
Business plans are not just for banks. All businesses should have a plan. How else can the owner or the employees understand how the business is going to move forward?
5. Build a support network and ask questions
Your support network could come from a variety of sources – friends, people in the same industry, other local business people, mentors, and/or business advisers. You can build a local network by attending and/or connecting online with networking groups in your local area. Use your network to ask questions. The only stupid questions is the one you don’t ask.
6. Really look after your customers
Customer service should be the heart of your business. Exceeding customer expectations can help attract and retain customers. Always deliver a quality product or service, on time and within the agreed budget.
7. Be on time with invoicing and keep a record of outstanding amounts
Your customers should always pay promptly, but every now and again you may need to remind them. Do this politely and clearly. Invoicing software can be a great addition to your business by allowing you to send invoices while at home or on-the-go, helping you get paid faster.
8. Hire the right people into the right job
One of the most difficult steps in starting up and growing a small business is taking on employees. You need to think rationally as to what type of person can help you, what tasks can and need to be delegated, what skills are required and then create a job description. This blog may help you approach employing people in the right way.
9. Be clear on what profit is and measure it
The true profit of a business is the only measure that matters when it comes to long term success and ultimately a successful exit when it is the crucial valuation measure. It’s important to get it right from day 1. Examine the profitability of your business and test your pricing and cost assumptions to destruction. Read more on what profit actually is.
10. Be agile for long term success
Be willing to learn, adjust and adapt. Agility is a very important trait for the successful entrepreneur.
11. Protect yourself with a robust shareholders agreement
Start-ups understandably focus on positive outcomes; but take advice early and ensure you have a robust shareholders’ agreement in place from the start. Founder shareholders often fall out and establishing clear ‘good leaver’ and ‘bad leaver provisions’ helps avoid pain, cost and resentment if it becomes necessary to part company at a future date. Discover more about shareholders agreements
12. Get an exit strategy, it’s never too early
In order to maximise the ‘life time’ value you get from your new business, it is essential to start to consider how you may exit or leave it at a later date. By carefully planning your exit strategy early you can shape your business into the ideal position for your chosen exit option. Ideally include it in your business plan and review annually. Read more about exit strategies here
These tips are very much focussed on starting and growing your business onto the next level in line with your personal business objectives. Starting up a business is the easy bit, it’s the growing for long term success that presents challenges.
CMC Business Advisors are trusted experts at helping business owners to grow a profitable business, solve business problems by helping you make important decisions and increase value. We provide a personalised and local service with a range of practical advice and perspective. As business owners ourselves, with a proven track record of success, we give trust and confidence that we can make the difference. We may be able to help your business.