How to survive the first year in business
Starting any business provides plenty of uncertainty, and carries considerable risk too. For any small business, it’s necessary to navigate successfully regardless of the current economic conditions to survive the initial 12 months and to push forward beyond that point. Here are a few suggestions on how to survive that first year as a new business owner.
Aim to avoid the fate of many new businesses
With a two-year business failure rate that’s easily 20 percent and sometimes considerably higher, the business owner needs to be active in their avoidance of the same fate. Knowing this fact, it’s necessary to hustle and grind through any difficulties to achieve results. While you may likely have some early employees, it’s required to lead energetically from the top down. Once employees observe your pace of work, passion for the business, and desire to succeed, they’ll usually rise to the occasion.
Hire a qualified accountant
Knowing your figures is something that business trouble-shooters often cite as necessary to be successful in any venture. Operating without a clear idea of your numbers, such as gross profit margin and costs, means fumbling around in the dark without a light source. For instance, understanding whether your cost of goods sold provides a sufficient gross profit margin leads directly down to the eventual bottom line. Get your business model wrong in the early stages, and it’ll be tough to rectify it later.
Accountants in Cardiff, or wherever you are based, are going to be perfectly qualified to provide business advice and accounting services. Trying to begin and proceed by doing it all yourself is going to be a mistake. Your focus needs to be on creating and building the business, not on doing your own books to save money. A Cardiff accountant like Hodge Bakshi with over three decades behind them as a services provider is well-positioned to provide sound advice. They offer a range of useful services to new founders. This includes tax advice, filing assistance, VAT returns, payroll, and more.
Achieving a work/life balance is going to be difficult as an entrepreneur
While the idea of a work/life balance is nice, it barely ever applies to a new business owner for a few reasons. For example, rather than working fewer hours – even going part-time to have additional free time – new businesses typically require more than full-time hours to succeed. The reason is simple: there is too much to get done!
Many self-made entrepreneurs began from humble beginnings, putting in long hours, and working plenty of weekends too. This isn’t a new thing either. Even Microsoft co-founder, Bill Gates, has stated previously that he never took a day off in his 20s. While this might be stretching the truth a little bit, it probably isn’t by much.
Prepare the people in your life for the time demands
Whether you are a singleton with a bunch of active friendships or someone with a family to support, the people around you need to know the time requirements for a business owner. While it’s possible to slow down or take on other staff to reduce your responsibilities later down the line, that won’t work in the early years. So, everyone needs to be prepared for what’s involved.
The reality is that some businesses consume relationships or marriages when the partner cannot stand to be apart from them. Working in the business together is one way around this; however, that can sometimes create interpersonal difficulties.
Know your numbers
One of the biggest problems with company owners that are creative rather than financially oriented is that they have numerous clever ideas but a poor grasp of business financials. Therefore, while they may be selling a product, they often won’t know the gross profit margin on it, the cost per unit, what it sells for, or how much they stand to make.
By not knowing the numbers behind products or services, it’s difficult to work on creative ideas such as a new product launch. This is because, without a strong grasp of the financials behind product costs, marketing, and so forth, it’s too easy to launch those that are doomed to be unprofitable.
Set useful, relevant business goals
People are naturally motivated by goals and the pursuit of them. All businesses should have goals, projects relating to them, and individual tasks within those projects. As the different projects are completed, steady progress should be made towards the business goals. Short, medium, and long-term goals are worth determining to ensure near-term actions will not prevent the attainment of long-term business objectives.
Create reliable systems
For small businesses, some owners will keep the ideas in their heads for fear of them being stolen. The reality, though, is that most employees are unsuitable as business owners and, as such, have little incentive to make off with your best ideas. It is important to create systems that are tested and continually improved to produce greater operational efficiencies. This allows for improving productivity, higher output, or whatever else is required.
Also, it creates a machine that keeps running even if the business owner wishes to leave or sell. A prospective buyer will look for proven systems inside the operation to ensure the past success is repeatable and isn’t directly tied to the current owner.
Keep spending low
While you should not curtail expenditures on items that are necessary or beneficial, care should be taken to avoid being frivolous with spending. Look for free or inexpensive options rather than always purchasing the most expensive, new item. For example, it’s unnecessary to create a fancy-looking office filled with new desks and premium office chairs. Take advantage of business retailers that buy furniture from failed businesses and sell it on. The same can be said for computer hardware too.
Many companies that would have been profitable and survived were brought to their knees by copious, unnecessary expenditures, poor systems, and carelessness. By keeping a tighter operation including monitoring spending levels, a newer business can avoid these potential pitfalls. A good accountant can also guide business owners as needed.
