Having supported the SME community for over 20 years, we are always asked what the characteristics are between a successful small business and one that could potentially fail.
The first 3-5 years of starting up a business are hugely important (if you make it that far), as 50% of SMEs fail within the first three years of operation.
The majority of start-ups are trying to provide a valuable product or service with a limited budget, pushing the boundaries of what is achievable with limited resources.
Usually operating as an individual owner, a single person can be responsible for stock handling, P&L accounts, marketing and business development as well as customer service and all the things that point towards making the product or service launch successfully.
We could write a long list of things to focus on, but have decided to whittle it down to our top 3 points for a small business to focus on in their first year;
1) Quality of product
90% of consumers trust peer recommendations whereas 14% trust advertisements so it’s important the product or service that you are selling is quality or valuable if you are to stand the test of time.
If you open a shop, how will people know you are open?
Marketing to your target audience should be thought out. How people perceive you will impact on your success. Simply put . . . “Marketing is what you do in business when you try to convince people to want and to buy what you have to sell.”
Couple your marketing efforts with a strong brand image and you’re onto a winner.
3) Accounting and legal
Most startups negate to focus on the accounting and legal aspects of starting a business. Like registering with Companies House, notifying HMRC and declaring the right amount of tax, keeping track of the businesses finances and ensuring that you comply with more technical aspects such as ‘Real Time PAYE’.
A common misconception is that employing a business accountant will be a significant outgoing for your business but the reality is that it often doesn’t cost as much as you might think. You are also secure in the knowledge that all your finances are taken care of by a professional so you can focus on developing and running your business.
20% of businesses fail within the first year, 1 in 3 businesses fail within the first 2 years and 50% within 3 years. Do you want to be one of them?