Let’s face facts; there are a number of reasons why a startup business may fail in the UK. While some of these issues may be universally applicable to all industries, there are others that may be relevant to specific marketplaces.
One of the biggest universal factors is a lack of financial growth, which prevents firms from realising their true potential and being able to meet an increased demand for customers.
In this article, we’ll look at the importance of financial growth for start-ups, and ask how firms can look to achieve in a sustainable manner?
In simple terms, financial growth is important as it allows start-ups to scale organically. This means that they’re able to increase their revenues and profitability over a sustained period of time, while reinvesting some of this income into the development and adaptation of their business model.
Over time, this minimises the level of debt within a particular start-up venture, while enabling companies to respond in an agile way to economic changes and increases in demand.
In terms of realising this objective, there are several practical steps that start-ups can follow.
1. Reduce the Levels of Debt Within Your Business
While increasing turnover is key to financial growth, this means little if costs increase at a faster rate and cause your profit margins to decrease. So, minimising costs and the levels of debt within your business is crucial, and there are several ways in which you can achieve this.
One of the best is to seek out agile and short-term financial solutions from the outset while prioritizing options that help you to maintain your equity share. You can sell your accounts receivable to third-party investors, for example, as this helps you to negate 60 and 90-day payment terms and minimise the cycle of debt.
2. Learn from Successful Startups
The most successful entrepreneurs have curious minds, as they’re always keen to learn from successful start-ups both within their industry and beyond. In this post, for example, WH Ireland’s head of wealth management Roddy Buchanan talks openly about the growth and regulatory challenges that hindered the business, while revealing key lessons in terms of how the firm responded proactively.
It’s also interesting to note how the firm expanded into the North of England, reducing costs and cornering a relatively untapped market in the process.
3. Get Your Pricing Right, and be agile
Finally, we come to the thorny issue of pricing your products or services, as this must balance your core business costs and need to offer value for money to target customers. This can be difficult for start-ups, but it’s crucial that you’re able to create a fair and agile price point that enables you to optimise your profit margins at all time.
This may mean being creative when developing price promotions, as this affords you flexibility while also enhancing your value proposition in the eyes of consumers.