There were 835,494 new businesses launched in the UK in 2020, a 41% increase on 2019, when 591,924 were registered. Great news on the face of it, however according to the latest figures from the Office for National Statistics, around 80 per cent of UK companies fail within their first year.
So, how do you ensure your new business is in the 20% that will survive?
Here are seven things I would encourage every person starting a business to know before they even start getting their business ‘out there’.
Know why your business exists.
In his book ‘Start with Why’, Simon Sinek talks about your ‘Why’ as your purpose, why you do what you do. What is it that motivated you to start your business? What gets you out of bed in the morning.
Once you’ve identified your why, this can be articulated through your mission statement. This should be shared with everyone who works in your business and communicated to customers and/or clients. It reinforces why they would want to work or do business with you.
Know your strengths.
Knowing your own strengths and weaknesses will help to decide how you position your business. The most common tool for determining this is the SWOT analysis, where you think about the internal Strengths and Weaknesses of the business, as well as the Opportunities and Threats that exist, or might exist at a future date, in the external market environment.
I would also encourage you to think about your own personal strengths and weaknesses. Strengths such as tenacity will help you succeed, whereas a lack of belief could derail you before you even start.
Know the weaknesses of your competitors.
Once you’ve looked at your own strengths and weaknesses, start to examine those of your direct competitors. Customer reviews can be a massive help here, especially those published on review sites such as Trustpilot or Feefo.
Knowing what your competitors do well, where they don’t do so well and how they position themselves will again help you to decide where you are going to position yourself in the market.
Know where you sit in the market.
There are several positions you could occupy in the market including low cost, targeting everyone to being more expensive and focusing on a particular unique selling point (USP).
The airline industry does this very well targeting different markets for a variation of ticketing options, some of which are offered on the same flight. The only difference here, is the level of airport and inflight service a passenger receives.
Know your ideal client.
Now you know why you do what you do, your own strengths and weaknesses and those of your competitors, and where you sit in the market, you will want to start to build a picture of your ideal client.
The first step is to find and analyse people who are already buying from the competition. Are there groups of people that aren’t being served and are they the sort of people you’d want to work with? Then, when you have this information, start to record their attributes, such as demographics and psychographics.
Psychographics are like gold dust if you get them right, as they will highlight the things that will motivate clients to buy from you, as well as what their objections might be.
Know how to market to them.
The definition that many marketers learn as they start out in the industry is: putting the right product in the right place, at the right price, at the right time.
Otherwise known as the 4Ps of marketing it is crucial that you know who you are talking to, how your product or service will make their lives better and what will motivate them to buy from you.
Of course, it’s crucial that you get the content right. It must carry the right message in the right tone to resonate with your ideal client. Equally, if not more crucial, is the selection of the media, or communications channels you use. You might have the greatest content out there, but if you’re not getting to the right people your campaign will fail.
Know your numbers.
Most businesses don’t fail because they had a bad business idea. They fail because they haven’t planned or tracked their cashflow or have priced their products and services so that they’re not making a profit.
By creating a budget, you’ll be able to project your cashflow, as well as see whether your prices are at the right level – or you’re spending too much money.
Launching a new business isn’t easy. You may know all there is to know about the products or services you plan to offer clients, but the truth is, many new businesses owners have never been trained in how to run a business.
I hope this blog helps you to successfully launch a business that trades for years to come, making the lives of your clients better.