Do you like the idea of being your own boss? Finding a potentially lucrative market gap is clearly on many entrepreneurs’ minds. GEM Global Report says 5.4 million business applications were filed in the USA in 2021.
However, it’s definitely not plain sailing for these new-born startup companies. Unfortunately, it’s common knowledge that a disappointingly large proportion of them will go bust within the first few years. Business fail rates vary depending on the source, from 50% to 90% within the first five months.
However, whatever the real statistics are, it’s safe to say that many startups simply won’t make it to their first birthday.
While there are always going to be challenges involved with setting up a new business, there are things you can do to lay a solid foundation and protect it as much as possible. With this in mind, Global Database has put together a guide with some helpful dos and don’ts to remember when setting up your venture.
Don’t Rely On Trends
When choosing the product or service your business will offer, don’t give too much weight to current trends. Fads come and go, and your startup could disappear along with them. Look for something that consumers really need. However, while being passionate about what you’re selling is recommended, you should remember that your startup needs to have mass appeal with its intended customers to be profitable. Passion projects do not become successful businesses if no one other than you is interested in them.
Lack of market
A recent study by CB Insights discovered that the top reason (42%) for startups failing is simply because there was a lack of market need for their product. To get around this, do plenty of research beforehand and talk to your target audience; put yourself in their shoes and look for solutions to their everyday challenges.
Don’t Set Unrealistic Goals
One of the biggest problems in startups today is the lack of realistic expectations and targets. Startups are not get-rich-quick schemes. If you believe this is true, talk to any successful entrepreneur. They will set you straight – startups take a very long time and investment to stabilize as a reputable businesses with a healthy customer base and profit.
Therefore don’t let money be your primary motivation for starting a business. Yes, you want to make money; all entrepreneurs do; however, focus on your business USP (unique selling point), which may be to provide customers solutions to their problems and commit to setting realistic goals.
This also goes for your timelines; startup founders are often too impatient and eager to drive the business forward before it’s fully ready.
Don’t Go OTT On Perks
Given the often long hours and uncertain futures involved with startups, it isn’t surprising that they usually have a higher staff turnover rate than established businesses. A Wall Street Journal article notes that startup attrition rates can be up to 15% higher.
Focus on creating a positive company culture for your staff over handing out employee benefits your business can not afford.
Businesses rethink their staff perks all the time too. For example, Dropbox announced that they would cut back on their extras after having worked out that they cost the company $25,000 per year per employee.
There are plenty of other, much less expensive, ways to ensure your elite staff is more likely to stick around.
Diversity, equality, and inclusion
Hire well using a DEI policy. Diversity, equality, and inclusion are here to stay, and job seekers want an equitable happy work environment where rewards like promotions are based on meritocracy.
Create work groups with employees as leaders, creating standards for improving inclusion and team building. Enlist passionate people and create a friendly working environment as the key drivers of culture change.
Allowing your staff greater autonomy in their everyday work is also a great way to make them feel valued. Plus, never underestimate the power of publically simply thanking your team for a job well done. Gamification can also be great for motivation; turn your targets into a contest and enjoy the fruits of your employees’ competitive sides.
Stripping your startup back to basics is crucial for keeping your costs as low as possible and making it easier for you and your team to focus on your goals. Get back to the basics, ask yourself why you do what you do, and get rid of everything that isn’t actually helping your business to become sustainable.
Meetings, lengthy negotiations, irrelevant blog posts, time spent on weekend work — filter what you actually need and what actually helps using the 80/20 rule. When it comes to your everyday organization, prioritize correctly and identify the most urgent tasks ahead of time. Break your activities down into steps to prevent yourself from becoming overwhelmed.
Do Use The Right Tools
In today’s technology-driven world, keeping up to date is essential; your business could fail solely because you don’t have the right tech. Not only does having the correct tools make your startup more efficient, but it could also be the difference between your target customers converting or not; for example, if you have a clunky website or lackluster security tool. Do your research on what your competitors are using and keep an eye on updates in your industry.
When it comes to employing the essential resources your business will need to function efficiently, these will generally include a hosting provider, an email responder, and a payment gateway system. Employing a contact database can also be extremely useful for startups. B2B directories offer a wealth of critical tools such as email lists, detailed company details, and digital insights, so you can easily reach out to thousands of potential customers instantly and take an in-depth look at your competition.
Do Allow For Flexibility
Although having a detailed business plan is undoubtedly essential, what is equally vital is ensuring that it can be adapted when the situation arises (and believe me, at some point, it will). It’s one thing to have an idea of how things will pan out, but when it comes to putting it into practice, many things could be detrimental to your startup if not dealt with efficiently.
Keep a watchful eye on your analytics, talk to your customers about their experience with your brand, and ensure you’re always up to date with your competitors’ activities and what’s happening in your industry.
There are no guarantees when it comes to setting up a new business. Still, provided you have a problem-solving product and a clear vision coupled with realistic goals and the right tools, you will already be ahead of many of your contemporaries. It’s also important to accept that mistakes are inevitable and that they can provide excellent opportunities to do the best for your business.