A recent Fair Business Loans UK blog referred to the TV series The Fixer, whose aim is not only entertaining its viewers, but also championing small businesses. That led us to consider some of the common reasons for why many small businesses end up failing, and in this post we want to share some common pitfalls with you. Here are our Top Five tips that could help you avoid the most common pitfalls facing the vast majority of start-ups!
1. Don't skimp on your market research
In your eagerness to start up the business you’ve always dreamed of it can be all too easy to forget to check whether there is actually a need for that business. Your business is much more likely to succeed if it is satisfying an existing need rather than trying to stimulate interest where there is no existing demand. So find a genuine opportunity based on an unmet need instead of trying to force your product or service on the reluctant customers! Taking the time to carefully research your sector and area will ensure the viability of your business long-term. Looking into other small businesses in the area to see which approaches are more successful than others can also be an amazing learning opportunity.
2. Expand your online presence to more than just your mum's Facebook wall
In this day and age, ignoring online marketing is a sin on a par with forgetting to put on your shoes before you leave home in the morning. An estimated 80% of consumers now do their research and shopping online - and that is a market share you don’t want to miss out on. It is a wise decision to exploit the speed, power and reach of online and social media marketing to give your business the very best chance of survival. These days even the more traditional methods of marketing often incorporate online components to increase effectiveness - for example, QR codes for scanning and social media icons to indicate the possibility of getting more information online. A range of free analytical tools can also help you to measure the effectiveness of your online marketing activity and put your valuable resources into where they are achieving maximum impact. And if you feel that you are too old for all this, then employ the younger generation’s skills - ask your nephew, your daughter, your neighbour’s kid, and put their online knowledge to good use.
3. Listen to your customers
Leading on from both the above points is the need to listen to your customers! What do they want? How did they feel about your service? Do they see any areas where you could improve? As your business becomes established it is important to follow market trends and keep up to date with what consumers are looking for from your product or service. Your business plan and model need to reflect this, so remaining flexible and being prepared to alter your business plan in response to changing market trends is a strength for any small business. Furthermore, everyone likes being heard and appreciated - so responding to your customers’ feedback and trying to meet their needs raises the value of your business in their eyes and can induce them to come back time and again. Online communication is excellent for serving this purpose and engaging your clients.
4. Pace for growth
The burning question - how fast to grow your business? Failing to adapt and grow when your competitors are actively exploiting every new niche they can find can result in your business shriveling up and dying like a plant left with no sunlight.. In many market sectors even standing still is effectively falling behind. On the other hand, rushing to expand at the wrong time can overstrain the available resources and put the business into debt, reducing the future resilience of the business and facilitating its demise. Therefore, expanding your business should be done with the same care as if you were starting all over again. Ensure that you do the right research to fully understand the new areas/products/services you want to expand into - and, most importantly, the potential customer base - before you move forward.
5. Don’t to be afraid to seek funding when you need it
If your finances are a little overstretched you may feel you are trapped. Limited capital can prevent a business owner from exploiting a growth opportunity or surviving unexpected events which negatively impact the business. You may think that you are not in a strong position to seek a small business loan, especially if you have been rejected by a bank or have debt already. However, at Fair Business Loans we consider every application for funding for small businesses on its individual merit. We take time to understand the business and the situation and gauge whether taking out a loan is affordable and the right decision for the business. Our small business loan decisions are made by humans, not generic credit scoring systems and our loans are fair, transparent and tailored around you and your business's cash flow. To find out more about how Fair Business Loans might be able to help you and your business, why not get in touch with us today!