If you’re thinking about becoming your own boss or you’ve recently started a business there are many challenges you will face that could be the difference between success and failure.
There were 672,890 new companies registered in 2018 to 2019, according to Companies House data.
Some will become multi-million pound successes, some will last forever, but others may have already failed. The one thing they have in common is that they will all face similar challenges as they fight to establish themselves and, initially, survive.
Here are seven common hurdles new businesses can face and some tips on how your company can overcome them.
Research? What research?
Sometimes the excitement and passion behind a business idea can cause entrepreneurs to set up a company without fully understanding what they are getting into. And without adequate research into your target audience, the market, potential longevity and your competitors you could be launching a product that has no chance of succeeding.
But don’t worry. If you failed to do your research it’s not too late to start. Take a look at your competitors and see what they’re doing. Can you make improvements to their offering to position yourself as the market leader? Is there something they’ve missed that could solve a problem your customer base has?
It’s important to remember to be flexible and don’t be scared to stray slightly (or even massively) from your original idea to meet the demand of the market. Your core product or service offering is what the success of your business hinges on, so it’s essential to get this right – even if it’s not what you originally had in mind.
Lack of money
Funding challenges for start-ups are common, and many struggle to find the money to achieve their goals. And as many failed business owners know – running out of money is essentially game over.
So it’s important that all new businesses do their research and keep an open mind to secure the most appropriate funding for their business’s needs.
Although loans, overdrafts and credit cards can provide the initial cash flow boost you need to get off the ground, they may also hinder your long-term prospects. Will you be able to keep up with interest? Or will you need to borrow more to keep your start-up afloat?
Alternatively, flexible funding solutions are available which don’t increase your debt burden.
Every business is different, which is why you need to take the time to find a facility that meets your cash flow needs.
Poor payment practices
Unfortunately, late payment is an issue that currently affects businesses of all sizes. Especially for new businesses, it can be crippling.
There are many ways to reduce the impact of late payment but we find the most effective is putting a good solid credit control procedure in place to make sure you are getting paid when you should be.
If you would rather focus your efforts on growing the business, you could consider outsource your credit management to the experts. This way they will do the hard work for you, ensuring that you get paid whilst you concentrate on getting your business off the ground.
Growing too quickly
A common mistake new businesses make is trying to grow before they’re ready. It’s important to remember not to run before you can walk.
Any diversification or additional sales you have planned will need to be carefully considered as the extra workload or investment may cause cash flow problems if you’re not ready to take it on.
It’s all very well securing new sales and quoting for new contracts, but it’s vital you have the ability to fulfil them without creating a cash flow shortage. Invoice Factoring, for instance, is well suited to young businesses as it releases cash against the value of invoices as they are raised, keeping cash flow ticking over and meaning the funding you receive grows in line with your business.
Similarly, will your equipment be able to cope with increased orders? Is your team trained to handle rapid growth?
These are all questions you should be asking before you take the steps towards growing. Otherwise you may find that the step forward is actually a massive move in the wrong direction.
Unfortunately, one hurdle your new business can’t avoid is plain old bad luck. Sometimes things go your way and other times they don’t. Unexpected world events such as pandemics, natural disasters and economic changes, to name a few, can all impact your business’s chances of survival but are completely out of your hands. The important thing is how your business deals with it.
It can be a good idea to take a step back from the business to fully evaluate the situation and wait to see if conditions improve before you touch the accelerator.
Another option is to try and diversify your current offering to turn the bad luck into a positive outcome. If you can successfully adapt to the difficult situation when your competitors are failing, you could secure a great position for your business.
Poor strategic management
Not everyone has what it takes to run a business. You may be an expert at your particular trade but, if you fall short in other leadership areas, for instance, you could find yourself in a great deal of difficulty.
The first thing to remember is that it’s OK to ask for help. Don’t let the fear of looking daft make you shy away from seeking expertise. A good entrepreneur knows that it is impossible to be an expert at everything.
You need to know your weaknesses and be able to recruit the right people to fill in these gaps. If your business is not in a position to take on employees you may also want to consider outsourcing key tasks to the experts as a flexible and cost effective way to gain added expertise.
Lack of marketing strategy
You could have the best product or service in the world but it’s useless if nobody knows about it. This is where marketing is key.
Don’t assume marketing will take care of itself. Word of mouth is great but that alone isn’t going to get your business to where you want it to be. You need a clear, well-researched marketing strategy that will deliver the results your business is hoping for.
Unfortunately, not all new business will have a big budget for marketing. But with social media levelling the playing field this isn’t necessarily a problem. Social media offers a platform for businesses to shout about their products and services and drive traffic to their website at very little cost. Many businesses have created a significant social following before even launching which has helped get them off to a flying start.
However, make sure your company is prepared for any extra business the marketing could bring. The last thing you want is to spend money driving customers to your site that you cannot capitalise on because your business doesn’t have the resources to deal with the work load.
Global Asset Finance Limited will show you a positive way forward!