There were 835,494 new businesses launched in the UK in 2020, a 41% increase on 2019, when 591,924 were registered.
Great news on the face of it, however according to the latest figures from the Office for National Statistics, around 80 per cent of UK companies fail within their first year.
So, how do you ensure your new business is in the 20% that will survive?
Here are seven things I would encourage every person starting a business to think about before starting their business.
1. Know your strengths and weaknesses
The most common tool for determining this is the SWOT analysis, where you think about the internal Strengths and Weaknesses of the business, as well as the Opportunities and Threats that exist, or might exist at a future date, in the external market environment.
2. Position yourself accordingly
Think about your own personal strengths and weaknesses. Strengths such as tenacity will help you succeed, whereas a lack of belief could derail you before you even start.
👉 Position yourself accordingly.
👉 Know why or where your business will exist.
👉 What is your ‘Why’?
👉 What is your purpose, why do you what you do?
👉 What is it that motivated you to start your business?
👉 What gets you out of bed in the morning?
👉 Do you think you can do it?
👉 Will you be able to rough during tough times?
Once you’ve identified your why, this can be articulated through your mission statement. This should be shared with colleagues, staff, business partners, customers and/or clients. It reinforces why they would want to work or do business with you.
3. Know where you want to sit in the market
There are several positions you could occupy in the market including low cost, targeting everyone to being more expensive and focusing on a particular unique selling point (USP).
4. Know your ideal client
The first step is to find and analyse people who are already buying from the competition. Are there groups of people that aren’t being served and are they the sort of people you’d want to work with?
Then, when you have this information, start to record their attributes, such as demographics and psychographics.
Psychographics (the study and classification of people according to their attitudes, aspirations, and other psychological criteria, especially in market research) is important knowledge to have when thinking of your business.
If done correctly, they will highlight the things that will motivate clients to buy from you, as well as what their objections might be.
5. Know how to market to them
This can be difficult, especially if you have not considered the above.
Otherwise known as the 4Ps of marketing, it is crucial that you know who you are talking to, how your product or service will make their lives better and what will motivate them to buy from you.
Of growing importance in today’s world of marketing is the selection of the media, or communications channels you use. You might have the greatest content out there, but if you’re not getting to the right people your campaign will fail.
Of course, it’s crucial that you get the content right. It must carry the right message in the right tone to resonate with your ideal client.
6. Know the weaknesses of your competitors
Knowing your own SWOT is important. Once you’ve looked at your own strengths and weaknesses, start to examine those of your direct competitors.
Customer reviews can be a massive help here.
Knowing what your competitors do well, where they don’t do so well and how they position themselves will again help you to decide where you are going to position yourself in the market.
7. Know your numbers
Most businesses don’t fail because they had a bad business idea. They fail because they haven’t planned or tracked their cash flow or have priced their products and services so that they’re not making a profit.
By creating a budget, you’ll be able to project your cash flow, as well as see whether your prices are at the right level – or you’re spending too much money.
I would add, you cannot do it all. You should look to have or build a support networking of trusted friends, advisors and supports. You will need this support group to be there when things are not going your way.
You might well have taken all the above on board. Put together an effective, detailed workable action plan. You know your numbers, you may have worked with the best but sometimes you will be alone, left with decisions, situations, good and bad where you will need an alternative view.
Who is holding you accountable?
Who ultimately is holding you responsible?
Who is there to support you and not judge you?