It’s well-known in the business community that as many as one in three start-up businesses fail in their first three years. While some entrepreneurs may like to blame the economy, the truth is that there’s never a perfect time to start a business – and more often than not, the main reason a start-up failed was a combination of bad planning, bad management and bad cash flow.
To improve your chance of success, you need to make sure you’ve done all your homework from the outset: and that starts with writing up a solid, watertight business plan that anticipates how you’ll deal with a variety of situations. One sure route to failure is to base your business plan on over-optimistic projections and put your head in the sand when it comes to the risks: not only will financiers not take you seriously, but you’ll have nothing to fall back on when the unexpected happens.
Your business plan also needs to include thorough market research, another step so many new businesses forget about. It’s vital to be able to demonstrate that there’s a need for your product in the marketplace, as well as knowing how crowded that marketplace is, how you can set yourself apart from competitors, and so on. Proper market research will also give you some idea of what your target customer is like, which should inform your first marketing campaign when the business is launched.
When you register your business you’ll need to make one of the most important decisions you’ll ever make for your company: deciding on its business structure. Usually entrepreneurs choose to do business as a sole proprietor, as a partnership or as a limited liability company. Being a sole proprietor means you answer to nobody, but it also means you’ll be doing all the hard work by yourself. Partnerships can be a great way to add manpower and spread the responsibility, but they can also go sour over disagreements. Forming a limited company is a much more complex way to operate a business, but it also lends you credibility and can make it easier to secure finance.
Finally, don’t give up at the first setback! Another reason so many start-ups fail is that their founders didn’t believe strongly enough to keep fighting through the bad times. If you’re truly prepared to give your business everything you’ve got, you’re already a hundred times more likely to succeed.