Tips on how you can reduce your chances of failure
Starting a business is as risky as it can get but the reward makes the risk worth it. If you are starting a business, you need to research, make plans, do forecasting and make sure you have enough finance for rainy days. Many people think that they would start making profit from day one, but it isn’t so. Studies suggest that almost 8 out of 10 businesses fail around the globe across the industry.
Before you start your entrepreneurial journey, you need to do your homework first, because it is the foundation of your future and it has to be a rock solid one. We will cover basic steps that you must follow to ensure your rate of success increases.
1) Research and analysis
Researching and studying is essential part. Before you go all out spending all your hard savings or for that matter of your investor it is advisable that you spend a good amount of time and money on research. Why? To identify:
- If there is any actual need of the products or services you plan to sell.
- If your niche is saturated or is it booming and there is space for some more players.
- Your competitor and their product, pricing and opportunity.
- Target customer, including gender, age and demography.
- Case study about the failures of businesses in the same niche to avoid pitfalls.
There are some of the elements that need to be studied and discovered before you start your business. Market research will help you gain insight and give you answers to lots of things that have been pondering inside your head. A thorough knowledge will boost your confidence too. It is a vice investment and worth every penny.
2) Write a Business Plan
“Failing to plan is planning to fail”- Alan Lakein.
It can be emphasized in as crisp and concisely said by Alan Lakein. Your vision takes lots more than imagination. At the initial stage, everything is in bits and pieces, unorganized and quite frankly there is a good chance of you forgetting those implementations those brilliant ideas that is there in your mind. A well written business plan turns your idea into reality and makes it easy for you to analyze how solid your business is. Business plans will help you organize your vision and help you identify flaws during the process. It is like a bible that you can always refer to if in case it is needed and map out the whole process ahead.
The business plan should include:
- Executive Summary: Executive summary is an overview of what’s written in your business plan. It makes a long story short. It should be used to grab attention and interest of readers to go through all of your business plan.
- Company Description: Company description can include the story behind your company, what inspired you to create one, your niche, what are the USPs, scope of demand and how you plan to meet it.
- Market Analysis: Market Analysis is self-explanatory. This should consist of all your findings during initial study. What makes you think it is worth the investment and effort of yours or the investors, a description of your targeted customers, pricing and gross margin, how much do you think your company’s market share gain will be, about your competitors, etc.
- Company’s structure: Every organization needs a hierarchy to work effectively with a clear role description and responsibility. You should define your company’s structure and draw an organizational chart. It should clearly state who is who and what their role is, a share in the company and their qualification and background that makes them suitable for the role. This should also indicate the legal structure of your business.
- Description of the product or service you intend to sell: This is the part where in you are focused on informing about your product. It needs to say about what needs does it address? If there is any need? What is the demand volume? What is the USP or advantage does your product has over your competitors? The current stage it is in. You need to honest with it and sell yourself over it from a consumer’s prospective before even thinking about selling it to your investors or anyone.
- Marketing and sales strategy: You should answer questions like how and what is the most effective strategy to penetrate the market. Once you have penetrated, the next thing is a growth strategy. The other things that it should include are distribution channels and strategy and communication.
- Financial Projections: Finance is a backbone of every business. It is the most crucial thing. This section should describe your financial projections. It should tell investors about breakeven point. It should consist of predicted income statements, balance sheets, cash flow statements, and capital expenditure budget.
To find a list of free business plan templates you can go to Entrepreneur.com
3) Evaluate your finances and don’t quit your job yet– To start the business you need to invest and to survive you need have reserve cash until you start generating revenue. You will have to make forecasts and honest assessment about the finances you will need and save accordingly. One of the top reasons, companies fail is because they run short of cash and you cannot run a show empty pocket. We highly recommend that if you are currently working somewhere do not leave the job until your business starts to generate a stable return, if nothing else.
4) Get ready for multi-tasking– When you work in a company, as an employee, you are limited to your role often and so is your knowledge but when you start your own venture your role expands. Nothing can be true than to say that every day should be a learning process for an entrepreneur. You will need to initially have knowledge of multiple aspects of your business right from tech to non-tech. You don’t need to have an in-depth knowledge, but good enough to get by but you should be an expert in your focused core areas.
Having said there are so many aspects that one cannot afford to learn, for that we highly recommend using websites freelancing websites such as:
And there are many more.
We wish there was a surefire way to ensure your success but there isn’t. A lot of factors due to which a business fails or succeeds, some you can control but some you cannot. These steps will help you to analyze real risk and can reduce the risk of failure.