Starting a new business requires both planning and adaptability. Valuable lessons arrive thick and fast, and if you don't properly explore your options or research your market, you could end up among the 55% that fail within five years.
To give your business a fighting chance, here's our list of five common start-up slip-ups and how to avoid them.
1. Neglecting market research
Even if you have years of experience, it's vital to be methodical and objective. Your market research should include:
- Primary research. Interviews, surveys or focus groups with existing and potential customers, and your peers. Use free online tools like SurveyGizmo to make life easier.
- Secondary research. Existing research by trade magazines and independent expert analysts like PricewaterhouseCoopers (PwC) and KPMG.
- Quantitative data. Industry and market trends in the long term, usually available from government departments and trade bodies.
2. Weak financial foundations
Whether you're funding your business with savings, family support or a bank loan, you need a 'Plan B'. Get to grips with alternative small business funding models like grants, angel investors and peer-to-peer lending on the government business portal.
Safeguards like public liability insurance are also essential. Public liability is your legal responsibility to do your job properly and protect your customers, and their right to sue if you don't. Finding the right public liability insurance will ensure your new business is protected in the worst case scenario.
3. Failing to forecast
Your business plan is your road map to success, and your cash flow forecast will tell you how much fuel you'll need to get there.
There are lots of free financial templates available online. The Start Up Donut and Enterprise for London both have business plan templates, and industry bodies like the Association of Chartered Certified Accountants (ACCA) and local authorities offer free cash flow forecast templates.
4. Avoiding advice
Since you've already arrived on our Business Guardian Angel blog, you're already on the way to dodging this pitfall. Make sure you continue to seek serious small business advice before making major decisions about the future of your business.
Speak to business advisors and colleagues, or find appropriate online checklists and tips, like our self-employed checklist.
5. Going it alone
You don't have to carry the business alone. If you hire talented employees or outsource the tasks you’re not able to do yourself, you can save a lot of stress and establish a more efficient way of advancing.
Look out for products geared to small business needs, whether it's free business accounting software like Wave, time management support like Toggl or online freelancer finders like PeoplePerHour. Be creative, open and flexible, and you'll find any problem can be solved.
Starting a new business is a big step, but by avoiding the pitfalls above you could be on track to ensure your business doesn’t fall at the first hurdle. And if you’re looking for a reason to bite the bullet and strike out on your own, take a look at our blog on the top reasons to start your own business.
