10 Ways to Prevent a Business Failure
10 Ways to Prevent a Business Failure
If you have the desire to set up a business, or are already running one then it’s important to check in on the realities of running it. Take a look at these top tips for remedies to prevent business failure.
1. Do your research.
You need to understand the market need for your product or service. Are you sure there is a need? Can you identify any similar products or any trends in the industry you are entering? Do you know who your competitors are (understand what they do well, or maybe where the gaps might be)? Who are you targeting? How will you grab their attention? What is the hook to get them to work with you?
2. Create a living business plan.
My pet peeve is people going to the trouble of creating a business plan and then putting it in a drawer and never looking at it again! Make it count. It will help set your direction and an action plan for your business goals and objectives. Be organised about it. You know what they say: ‘Failing to plan is planning to fail!’ A plan will help you focus and stay on track (especially if you revisit it regularly).
3. Get the financial support or backing you need.
Your business plan will go part of the way to securing the cash you need to start your business. You have to be clear on what costs are required to set up and run your business. Set-up costs often come as a shock.
Consider whether you need to borrow money. Business loans can be expensive, so you might need to finance equipment instead of buying it outright to balance or smooth cash needs in your first six months.
4. Manage cash flow like your life depends on it.
Follow the golden rule: ‘cash is king’. It’s so important to make sure that you are being paid on a similar timeline to when you pay your suppliers, so look carefully at the payment terms. Marry income with outgoings as well as possible. How is the business bank balance? Are your debtors paying you in a timely manner? Are you ensuring you pay your creditors on time?
5. Become a marketing ace or work with someone who is.
Marketing your business is a necessary and ongoing requirement to continue to have visitors or customers come to your business or visit your website. It’s also critical for attracting new customers and for retaining your loyal customers. I’m sure you like it when a product you have used and are loyal to posts on Instagram and shares a new model or improved version. Or the people running the local eatery add something new to the menu, giving you another reason to pop by. There are many options for marketing both online and offline. Remember to measure your return on investment so you know what channel or marketing tool works for you. (For example, has there been an increase in visitors to your business or website since you did a local area mail drop?) Have you considered the role of an influencer in your marketing strategy?
6. Stay on top of customer needs and your competition.
Asking for feedback is one of the most powerful ways to stay on top of your customers’ needs. Don’t be afraid to seek feedback: it’s a gift. You can build greater loyalty by taking this feedback on board. Needs change over time, but don’t lose sight of your customers once you are knee-deep in running your business. Losing sight of them can have people running to your competition. If possible, develop a healthy relationship with your competitors. I like to think the world is big enough for everyone.
7. Learn to love change.
You are bound to face challenges along the way in your business, so it would be wise to remember the motto ‘failing cheaply and quickly’ rather than hanging on. Don’t be afraid to call it. Equally, welcome change for you, for your industry and for your customer. Embrace change and ensure your business is responding to it. Being adaptable impacts business longevity.
8. Be clear about the pace of growth that works for you.
Ever heard of growing pains? It’s a balancing act starting a business and with all of your pre-work done so well, sometimes your business can feel like a runaway success, but being prepared for future growth is an important success factor. Consider what the growing needs could be in your business, such as the number
of people you need, type of technology, working space, greater customer expectations, new industry regulations. Growth can be a major business risk and you need to create a plan that can address it.
9. Recruit and retain the right people.
When starting out, consider who you need to close your skill gap. Who do you need to hire to complement your skills? Then consider diversity, personal fit, attitude and experience. The next challenge is retaining people and working to create a culture that makes people want to stay. Even better is if they hear about how good your culture is from their peer groups who work for your competitors and want to join your business!
10. Seek help and support.
As I mentioned at the start of the chapter, your own business can be extremely rewarding, but exhaustion can also destroy you and the business. Being an entrepreneur can be lonely. You must reach out to your peers, have a coffee with them, listen to a business-minded podcast, locate a business coach and talk to your accountant. They can all help you. Dialling up your personal finance village early is a must. Talking regularly to your trusted advisor about the health of your business will go a long way towards keeping you focused.