Every startup owner desires to launch a successful business that gives them the freedom and financial independence that made them quit a job.
But according to studies, 20% of small businesses fail within the first year, and 50% fail within 5 years.
If you have seen this study, you might question whether your business can be among the percentage who succeed or whether it involves something special that is beyond your reach.
As an entrepreneur and business consultant who has experienced a failed business and eventually built several successful companies, I want to share 5 things you can do to ensure that your business succeeds.
Market and test your idea: Create and sell your minimum viable product
Most business owners do not conduct enough due diligence or research in advance. Instead, they launch a business based on gut instinct.
Research reveals that most founders start a business without conducting enough due diligence, which often results in business failure. 34% of startups fail because they do not meet the product-market fit.
It’s important to test and verify your business idea before spending time, money, and effort into launching the business. Thinking through the business idea and proving its viability before the startup will help to prevent business failure.
As a founder, your work goes beyond developing ideas and believing that people, friends and families will embrace them. You also have the responsibility to step out and find out what people need, go back and see what part of your idea can help them, and craft a story that people care about. This process is what intelligent marketers use every day to stay ahead of the curve, beat their competitors and position their brand to stand out in a crowded market.
To learn how to validate your business idea, you can download the ‘Succeed Before You Start’ Startup guide.
Create a business plan.
A business plan is a written guide that describes the vision and objectives and how you intend to meet those objectives.
You don’t have to be an expert in business plan writing before you can produce a decent business plan.
The most important aspect is to understand all the business plan elements, including your product/service offerings, an assessment of the marketplace and competitive landscape, your operations, marketing and human resources strategies, your financial plan, risks and mitigation strategies, and your growth strategy.
This plan will not only serve as an excellent internal communication tool but will also enable you to engage board members and investors when you need them.
For example, I didn’t have a business plan when I started my first business, a clothing boutique. Although the company did very well, I knew I could not sustain the growth. In my second business — a restaurant — I needed financial investments, and the first question my bank asked me was to show my business plan. I didn’t have one, so one of the bankers gave me a template. It was easy for me to fill out the template because I was very clear about what business I was trying to develop. I had already done my competitive analysis, customer interviews and cash flow. So, let your focus be on the clarity stage because that’s where the answers to your business plan question will most likely come from.
There are many free online business planning tools you can use. I will personally recommend the Virgin Startup Business Planning template and guide.
Build the right team
Entrepreneurship is not a comfortable journey and nobody can grow a successful business alone. It’s OK to start out doing everything by yourself, but it’s not sustainable. At some point, you need to plan to document all your processes and hire people who will buy into your vision and support your dreams. Then carefully select your first team members and ensure you hire people who share your values and vision of growth.
Before hiring your team, it’s important to be clear on what role each team member will need to play to help you achieve the business objectives.
To help you achieve this, you can document everything you are doing or need to be doing in the business. Then write down the attributes or experience that someone who needs to occupy that role must possess. Finally, reach out and find people who can help you.
Depending on your level of vision for your new venture, you may need a board of directors, or you can decide to build a management team that is genuinely committed to your vision and a network of people within and outside of your industry.
Building a board of directors from the start will help you to develop a sustainable company. Having a board also adds to your organization’s credibility — you get the advice you need to grow a thriving business. Your board should consist of lawyers, financial advisers, marketing experts, and operations people.
You may not think you need a board at the moment. If that is the case, then you need advisors, mentors or coaches. You can hire virtual assistants from sites like Upwork and hire designers from sites like Fiverr for online entrepreneurs. I have continued to use these sites for over five years.
Develop financial discipline.
Please take a look at all aspects of your business plan and meticulously implement it. The most important thing is your financial plan. It’s important to separate your finances from your business finances. Therefore, you need to pay yourself a salary from the start. Keep separate bank accounts and separate your funds from your company’s funds. Maintain a clear financial record. Make it a habit to have a monthly income statement, cash plan and cash flow, budgeting and budget analysis. These terms may seem too much for an aspiring entrepreneur, but you need to know this. You can start from step one, but know that at some point if you need to expand your business, investors will want to see these records. Being disciplined will help you to achieve this. Build transparent systems and structures, maybe not immediately, but keep in mind that you need them.
Develop the mindset of a leader.
As a leader, you have to be equipped to make quick decisions, drive changes, communicate your vision and values, lead yourself, observe self-care, lead your team and direct your team towards your vision and goals. It can be a lot. But with proper planning, the right support and a passionate team, you can achieve all of this.
For example, when I ran a restaurant business and decided to create several branches and sales outlets due to our customers’ demand, I was stretched beyond my comfort zone.
My only saving grace was finding a business coach who guided me to develop myself as a leader. I learned how to build relationships and partnerships with my team, suppliers, customers and clients. I understood how and what to delegate and how to make tough decisions.
Without that training, I was ready to close my business. So, do yourself a favour and learn the critical skills to grow a sustainable business.
I firmly believe that you will succeed in your business endeavours if you follow these steps. And to avoid feeling overwhelmed, I advise that you start with the first step today and take it one step at a time because knowledge is power only when implemented.