Starting a new business has always been challenging. Even if you have funding and have done it before, you are not guaranteed success. Failure rate for new businesses remains defiantly high, at around 80 percent or more. It’s imperative that you get the basics right before you invest time and resources into any idea. And when you are already in business, it’s even more crucial to focus on what works and will eventually lead to success.
These are a few non-negotiable fundamentals of launching and running a new business.
1. Launch a business that solves a real problem. Look into real problems people have (not just any startup idea) for business opportunities. To get the best ideas that solves problems, ask yourself questions. What products can you not live without? Who needs the solution to the problem you want to solve? Is there a market for the solution? Will you use the product or service yourself? Build for yourself first; if you can.
Solve your own problem, chances are lots of others have the same problem and are looking for solutions just like you. You could also focus on service or product enhancements. Google simplified search when we still had Yahoo and others. When other search companies integrated news, weather, sports etc, Google gave your just a search bar. It couldn’t get any simpler than that. Look for existing businesses with clutter that can be made simpler or better.
2. Focus on a sustainable market with opportunity for growth. Think about how you will grow. Having a good idea isn’t always enough to be successful. If your idea appeals to a very narrow market instead of a bigger market with opportunity for growth, you are likely to face growth challenges in the future.
Unless you are building a lifestyle business for yourself, you should invest your time and resources into a business with room for growth. A scalable business becomes even more important when you intend to raise funds from investors. And, investors tend to prefer businesses in sizable industries that are easily scalable and where they can drive higher margins over time.
You don’t want to start a business only to discover that there really isn’t a market after all or you are competing for a very small slice of a very small pie. To avoid that problem, think in terms of large categories first. Profitable new niches are typically found by drilling down into such already successful categories. Your best bet is to start with a big category, then get narrow.
3. Bring the best people together: Most startup founders are friends from school, colleagues at work or probably an entrepreneur with an idea who finds another great person with a different skill set. Which ever way you meet your founding partner, you should be careful about who you partner to start a business. Every business needs leaders who are visionaries and know what they want and how to fulfil their visions.
The ultimate test, though, is instilling the dream: encouraging the people around you to believe in your vision and quest. You have a better chance at success if your founding partners complement your skill set and are passionate about the idea you intend to pursue. Your business is likely to consume most of your productive life, hence the need to love what you do without hesitation.
At some point, you will not be able to do everything yourself, nor should you, and your business will be only as good as its people. The first few employees can make or break your startup. The importance of hiring the best people cannot be overemphasised. Get it right, and they will figure out and do what needs to be done to get your business closer to success; miss out on this, and your startup is likely to struggle.
4. Get your finances right. Once you are up and running, you can’t compromise on your finances. Whether bootstrapped or funded, you need to be prudent about how your business spends. Most startups fail because they ran out of money. If you don’t have a good grasp of your spending habit as a startup, you will be forced to shutdown sooner than you planned. You need to create a financial roadmap and budget –and then having the discipline to follow it. A financial plan reminds you where and how to spend money, and it provides ways to measure progress or shortfalls.
The hassle of paperwork, receipts and spreadsheets can take away all the precious time you need to focus on your core business. There are now lots of tools, resources and businesses out there that specifically handle accounting processes of new businesses. You can confidently outsource your bookkeeping and accounting to a third-party service like Tax Twerk (online bookkeeping and accounting service) whilst you focus on serving your customers and bringing in more business.