“50% of UK business fail within first five years”. This is just one of the many statistics that have SME’s worried for their future, in particular for those start-ups that are up against established competitors. This has led us to investigate the common causes behind so many new businesses failing in this article, and we also want to share our tips on running a successful business.
Here are 5 tips that could help you avoid the most common pitfalls facing the vast majority of start-ups!
1. Research and analyse
Is there a gap in the market for your business? Is there demand for what you’re offering? How saturated is your market?... These are just some of the questions businesses should be asking themselves before launching. It can be very easy to get caught up in the excitement of opening up a new business, but it’s important to establish whether there is a genuine need for your products / service offering before making the next step.
Businesses are more likely to succeed by fulfilling an existing demand instead of generating interest where there is no existing need. With this in mind, you should take plenty of time to research the market to determine how viable your business will be in the long-run. A great way to learn what works and what doesn’t work in your industry is by looking at other small business in the area, try to find out out which approaches have proven to be more successful for them.
2. Utilise the power of digital marketing
It is estimated that 93% of customers will research purchases and shop online* - if you haven’t got your sights set on digital marketing, you could be missing out on a large share of the market! Gone are the days when businesses could just rely on business directories to help them reach customers. These days it is essential to have an online presence, whether it’s through PPC ads on search engines or posting content regularly to social media channels.
There are wide range of free tools available to measure the effectiveness of your digital marketing activities and put your valuable resources into where they are achieving maximum impact. Feeling overwhelmed with all the marketing jargon and different digital methods? Why not take a read of our recent guide to tackling digital marketing.
*Google Insights 2015
3. Stop, Listen and Go
Linked to the points above is the importance of listening to your customers! What do they say about your products and services? Have they suggested any areas for improvement? Often in the midst of expanding a business, it can be easy to forget about communicating with customers.
Try to ask customers for feedback regularly as this can help them feel appreciated and heard. It can cost 6-7 times more to acquire a new customer, so remember to keep your existing customers satisfied! Their feedback can raise genuine weaknesses in your business, using this feedback you can alter your business plan and model to reach it’s maximum potential.
4. Don’t run before you can walk!
The million dollar question - how fast to grow your business? On one hand, failing to keep up with your competitors can weaken your business’s hold on the market and subsequently lead to its demise. On the other side of the spectrum, rushing to grow at the wrong time can over-strain the available resources and move your business into debt, this can reduce any resilience your business has in the future and facilitate in it going bust.
The answer to this question is you need to expand your business with the same care as if you were starting all over again. Before you choose to expand make sure you have done the right research to have a full understanding of the new areas, products or services you want to expand into, in addition the potential customer base.
5. Don’t to be afraid to seek funding when you need it
Often at times you may feel you are trapped if your finances are overstretched. The lack of capital can have negative impact on your business for obvious reasons but it can also prevent the business from moving forward. Businesses can experience this issue at any stage, so don’t be afraid to seek funding.
If you have applied for funding but have been rejected by a bank or other loan companies e.g. due to having a bad credit history, we at Fair Business Loans could be able to help. We will consider each and every application for a small business loan on its individual merit. Unlike other loan companies, we don't base our decisions on generic credit scoring. Our team will get to know you and your business, understand the situation and decide whether taking out a loan is the right decision for the business and is affordable.