It is a harsh reality that about 75% of the startups end up in failure. Getting your small business off the ground is easy, but sustaining your business operations and making your small business grow is the real challenge. With almost three-quarters of the hoard not ending well, how will you make sure your startup will not be one of them?
These statistics might intimidate you. But let’s focus on the remaining 25% of successful startups and hope to be one of them. We have drawn up 10 tips to make your start-up fail-proof.
Tip #1 Do not Jump in without a Plan
Most small businesses get started on a hunch. Those who want to run a small business walk around the town and find that something is missing. Then they will take a call on it and open up a bakery or a high-end salon in that place. They think that they could fill in the missing piece or render a better product or service than the prevailing ones.
This could be a starting spark for most small businesses, but you should never dive in just like that. There is a lot of effort, money, and time you are going to invest in your small business. You will have to have a strong idea and test the theory if it works fine.
Let us take the bakery for example. Let’s say there is no bakery in your locality. Everyone eats bread. Surely, there must be high demand for fresh bread in your neighborhood and people would flood in your shop if you open one. Seems so easy, isn’t it?
But in the 1980s, bakeries fell in number, overshadowed by the supermarket chains. These supermarkets started offering bread and other baked goods, making them a one-stop store to buy everything for a week. Then bakeries had a tough time coming back with the artisan touch and attractive product ranges.
The best way to go about it is by taking a local survey before you get into the mud. Draw a survey and get opinions from people in your neighborhood. The aim of the survey is to know if they want a bakery in that place and if so, will they buy from you.
You must be honest in your research. Do not let your interests overshadow the facts. If you find there is a demand, then the next step is to make sure the other aspects are viable as the cost of the premise, supplies, marketing, logistics, and so on.
The more you are researching for your business plan, there are fewer chances for nasty shocks you are about to experience.
Tip #2 Track every Penny Spent and Received
Keeping track of all your financial movements paves way for de-cluttered accounting and tax filing. Label and categorize each expense and have clear documentation for every dime that runs in and out of your small business.
Juggling with a box full of paper receipts is a tiresome way of tracking your expenses and income. Opting for cashless payment methods like online payments, card payments can help you track your payment activities electronically. Leverage the automated bookkeeping tools to get confident with your numbers.
For example, QuickBooks accommodates hundreds of integration tools with which you can automatically import bulk invoices, payments, and refunds. You can even sync your payment system or e-commerce store into QuickBooks and sync sales and transactions as they happen. With these automated QuickBooks accounting solutions, you will never miss out on a penny and have hassle-free accounting and tax filing.
Tip #3 Be Diligent with the Cash Flow
Sometimes, startups go down even though they have sound sales and ample annual profits. This is because the business would let cash go faster than it comes in. Startups would get excited about the new business and profits and would invest in new machinery, stocks or premises, for example.
You might get stuck with the cash when the expected payment does not materialize. You will find a bigger hole in your cash flow when your client delays or fails to settle down the expected payment.
It is always advisable to save a sum of money to fill in the cash gaps in such situations. Or you may end up exhausting your credit line or opt for loans. So, always keep aside a sum of money, ideally a six-month salary pot. This amount could be your buffer and savior for your financial future.
Tip #4 Do not Underspend
We have witnessed some startups that fork out too much all washed up. Likewise, not spending enough might also cause business failure. You should always keep an eye on the cash flow and forecast the market demand and your stock demand. Not buying enough stock will result in missed opportunities to increase your sales.
The same happens with other parts of your business like branding, promoting, and marketing. Making the right investment in these will bring back a considerable return of investment. Failing to do so increases the chances for your startup to meltdown in the competitive market noise.
Tip #5 Never fixate or Forget your Competition
Every business runs along with a competitive rival. There is always a competitor trying to seize a share of your pie. Owning a small business, you must always watch over your rivals, their financial, marketing, and branding movements. Get a picture of the opportunities and threats they reflect on you on each move.
For instance, your competition might underperform in a certain area and there might be a customer who is unhappy about it. That’s the gap you have to fill in, bump in with a timely offer and grab your seat. On the other hand, if your rival launches a new product, you should know how to respond to it.
But do not lose focus on market trends in the rush of following your competition. You have to equally concentrate on your own operations as you have an eye on your rivals. Always have clarity about where you are heading.
Tip #6 Have a Brilliant Pricing Strategy
There is something called Goldilocks price, by which you tell your customers that you are neither too cheap nor too expensive. You have to make them believe that what they are buying, be it a car or a haircut, is exactly what they are looking for.
But the challenge here is, you cannot set a definite price for all your products and services. That’s why you will have to be wise with your pricing strategy. When your price is too low, your customers may assume that as junk and turn down. And when it is too high, you may lose potential customers. Both are not a smart choice.
Research similar products and services in the market, get feedback from customers, work on your pricing strategy and constantly check if your pricing strategy is not outdated.
Tip #7 Insure as much as You can
Putting off appropriate cover for your small business might shatter everything in a snap. Apart from the basics like fire, theft, and breakage, it is advisable to take up personal indemnity insurance and employers’ liability insurance. And if you will have customers on your premises, you should consider public liability insurance as well.
There is no standard readymade package of insurance that’s liable for all types of businesses. Insurance preference differs with the type and place of your business. A doctor in one part of the county and a florist in another part might not have the same insurance preference. Better to consult an expert when you are unsure on which one to pick.
Tip #8 Hop on to E-commerce
Selling online can make a huge difference in the way you run your business. You can set up an e-commerce store at your own domain name and sell your products online. This widens your visibility and chances for sales. You don’t have to set up multiple store-fronts to access customers globally.
E-commerce stores make it possible for you to sell even while you sleep. It makes your whole sales process friction-free and automated. You can even connect your e-commerce store to your accounting system and record your sales and transactions automatically to get things done easier.
PayTraQer is one such integration tool for QuickBooks and Amazon, Shopify, and WooCommerce. With PayTraQer, you can get everything from sales, invoices, refunds to inventory changes recorded into QuickBooks automatically.
Take advantage of the technology and get things done automatically. You can try exploring these applications with their free trial before you let them automate your numbers.
Tip #9 Choose a pack of the Right Employees
Employee hiring is also a strategic move in business. You will have to be more witty and cautious when you start from scratch. Hiring too early and too late are common mistakes startups commit. Putting people before you are ready is a waste of money. And not adding numbers to your crew when you need them might risk your business operations.
Some businesses prefer hiring people with low skills, but with a good attitude. Rather than hiring who’s right for the job, hiring who’s right for the business makes more sense. But make sure the people you put in are talented, motivated, and dependable.
Also, you should focus on providing them with a welcoming and motivating work environment. You should keep things to ensure that your employees love to come to the office at 9 am on even Monday mornings. And make sure to teach them your company’s core values and strategies.
All small businesses have a little history of wins and losses. Running a successful business is always a game of risk. With these tips, you can fine-tune the odds in your favor, and increase the chance of winning in the small business. Do your research and invest in the right things, your startup will surely raise up the ladder.
