There is good news and there is bad news, so let’s start with the good news!
Between 2017 and 2018 there were 381,000 Business Births
The bad news…there were 362,000 Business Deaths
We can clearly see from the stats above that there were more new businesses starting up than closing down so maybe not such bad news after all, and if we look more closely, the 5-year survival rate of businesses started in 2013 was 42% (Office of National Statistics, 2021).
So how do we avoid becoming one of the 58% that didn’t survive past 5 years? The simple answer is - there is no simple answer!
Not very helpful I know, but here’s the rub: if you have a resource that can help inform you of the pitfalls and the things to avoid, that’s a huge benefit. Contrary to what you might believe, these are the ill-informed 58% who did not survive.
As a business consultant, helping SMEs to grow is my job so I’m here to look at the data and identify a clear way forward for your business; in order to do this effectively, I need to understand the common mistakes made by the unfortunate 58%.
I have identified 5 pitfall areas which may ring a bell with you as a business owner:
1. They over-estimate their own brilliance - too many business owners over-estimate what they can achieve, love their own ideas, take advice from friends and family and get starry-eyed and excited. It’s easily done and but leads to poor decision making right form the word go.
2. Forget their target market - they do not fully consider the gap in the market, who their customers are likely to be and if they really need the service or product being offered. Fundamentally, market research is often left too late and usually happens sometime after the business has launched and money has been spent.
3. Fail to create a proper business plan - the business plan, if completed properly, should include as a minimum, market and competitor analysis, financial forecast, marketing strategy and a 90-day, 1 year and 3-year plan. By committing it to paper, it becomes a reference point and should be reviewed and updated regularly.
4. Underestimate level of finance require - so many times I have seen business owners running out of funds after 6 months because they underestimated the start up costs (usually because they hadn’t written a business plan with a financial forecast). Plan what you need and double it as a good rule of thumb and this may then give you 12 months instead of just 6 to get your business on to a stable footing.
5. Measure and mend - it is key to measure any activity and correct it if it is not working. This stops the scattergun approach to marketing and also helps product development as it is important to get customer feedback too.
So, whilst there is no easy solution, we can take steps to improve our chances of success by looking at the 58% that failed and learn valuable lessons from them!
If you’d like to safeguard your business, why not book a free 'clear the FOG' review or discovery call with me and join the other business survivors.
Resolving your business challenges through tailored solutions; consultancy, mentoring, training and our 'Clear the Fog' Review.