The pressure is on for start-ups, with so many of us hustling towards dreams of creating the next Glam Corner, TDE or Bumble.However, research from the data registry and analytics business Illion, revealed that Australian small business and start-up failure rose by 12.7% in 2018, and the rate for new businesses being registered with the Australian Securities and Investments Commission actually decreased by 2.7%.
Yikes. What does this mean for fledgling small business and start-ups amongst us? Like newly hatched turtles scrambling for the sea, are most of our efforts destined to fail?
With the statistics pointing to more failures than successes, if you neglect to address the common factors that failing businesses all seem to share, then the answer is YES.
However – if you recognise the weak points from the beginning and address your unique set of challenges, you have a far greater chance of making it to the finish line.
Keep reading for the 4 major factors that can kill your start-up
#1 – Lack of Financial Control
Ideas and dreams are great, but for your business to succeed, you must manage cash flow. You need to be in control of your expenditure and your income in equal measure.
It’s a simple fact that your business’s income will more than likely be unstable or non-existent for the first few months. So unless you received a generous cash injection from investors or have been very lucky to nail it with early product sales, your cash flow won’t be reliable.
In the early days, it’s highly likely that you may not be able to take a startup founder salary from your business, and this is even more true if your cash flow is limited.
However, there are greater implications of poor cash flows that go beyond basic financial worries.
For example, you risk not being able to roll out new products, set up marketing activations, nor pay employees and suppliers. These issues outweigh your need for a wage, and you must prioritise paying others before yourself.
As the founder, it’s your responsibility to honour any money that you owe, and occasionally you may need to take out a short term loan to get through any dry patches. Companies such as Hock Your Ride provide short term cash solutions that will help preserve your reputation and keep your business out of trouble.
#2 – Neglecting to Market Your Business
In the early days, you’ll have a passion and drive to tell everyone you meet about your new baby (the business). Enthusiastic friends and family will help spread the word and share your social media posts, which will generate a few leads. And then, nothing. You’ll stagnate.
Now is not the time to sit back and just hope and wait. In the early start-up stages you need to be highly active in the marketing and sales of your business, investing time and money to really push the name out there. Waiting for the effects of organic search to bring web traffic and sales won’t be enough to bring in the money.
Trial and test which platforms are working for your business, and remember to keep a close tab on any trends and changes. You have access to some great marketing metrics, so it’s crazy not to use them to your business’s advantage.
#3 – Inconsistent Planning
Pre-launch, you will have made some major decisions to get your business off the ground, and spent what seems like an eternity developing a business plan to map out the steps to help you reach your goals.
It’s common for start-up founders to get tired of the planning stage after a while, instead preferring to “wing it” if/when any hurdles arise. While this play-it-by ear approach feels more exciting, it’s also much more risky. It’s a better idea to map out several contingency plans BEFORE launching to carry the burden should anything not work out the way you envisaged.
Being under-prepared or over-optimistic means you might be caught out if any obstacles get in your way. Instead, pay as much attention to small details as you do the large ones – they are the foundation of your business success.
#4 – Lack of advisory
No matter how experienced you think you are, it’s always wise to seek a mentor to give you guidance and objectivity as you progress along your journey. A mentor will be invaluable in providing advice about how to overcome the various challenges.
Don’t think that seeking a mentor means that you aren’t ready to be successful; on the contrary, a mentor will help you to develop your skills and help you to avoid making critical errors that impact the longevity of your venture.