Start-ups are largely seen as the age band of companies who are most likely to fail. However statistics from Creditsafe research in 2015, shows that the most insolvencies were companies aged between 3 and 10 years. Start-ups or young companies are widely seen as the most vulnerable as they are starting from scratch and assumed little experience, and with good reason. However every company is at risk of failing, especially if they become complacent. We have put together a list aspects that could potentially destroy your start-up if they aren’t dealt with accordingly.
- You’re ‘too busy’ to be productive
Many companies fall into this trap, especially a start-up. With your business first getting up and running, everyone is so busy trying to get new business through the door and make profit that things aren’t always done in the most efficient way. With targets on heads and a point to prove, it’s easy to do just about anything to make some money and verify that starting your own business was a good idea. It’s important to take a step back, and ensure that everything you are doing is cost effective, productive and efficient. Be careful with your money and analyse where it’s best spent. For example, find the cheapest way to bring in leads, research different marketing tools and only invest in critical software for your staff. Make sure your trained staff aren’t doing time consuming things such as admin or reception work. Splashing out on hiring someone to take care of the smaller jobs will benefit you in the long run as your qualified staff can get on with more demanding tasks and bringing in more customers.
- Ignoring your customers
Ignoring your customers is a big no no. Customer retention is a bigger factor than new business when it comes to bringing in sales; more people are likely to buy something from a brand they have previously dealt with than a brand new one. So when you do get new customers on board, try your hardest to keep them. Offer excellent customer service and address all queries and complaints as best you can. In the world we live in, many customer complaints now play out online as well as offline. Where-as in the past, customers would call or write a letter of complaint to a business, they now post their comments on the internet for the world to see; possibly tarnishing your reputation to other potential customers. Have a system set up where you monitor anything said about your company. Google alerts allow you to monitor key words such as your business name, and will send you an email if anything appears online regarding the key words. It is also good to set up and monitor review sites such as Trust Pilot, this way you can respond to customers both privately and publically if they have any complaints.
- Not having a cash safety net
Not having a cash safety net is like not having building insurance on your house if it burns down. If something out of your control happens, like a big customer going bust and not paying you, you’re whole business could come crashing down if you are unable to manage your costs. Having some money aside as a reserve can bail you out without the hit of a non-paying customer completely damaging your business. This doesn’t necessarily have to be out of your own pocket either. If you budget an emergency fund into your business plan, money should be going into it every month if your business is doing well. If something does happen out of the blue, you will then be ready to deal with it.
- Being too concerned with competitors
Most advice given to you when you start your own business will include researching your competitors and what they do well. It’s worth knowing how much market share they have and what their USP is and by analysing them, you are able to place your company in the market place, but don’t get too caught up on them. Some companies get so caught up on what their competitors are doing that they lose control of what their own company is doing and drain their resources trying to compete with bigger companies that have much larger budgets. Look at a competitors marketing, but don’t copy it. Go after their customers, but don’t forget virgin customers who don’t yet use your product or services at all.
- Not appreciating your staff
Your staff are your key tools in any business. If you’re a one man band you can only get so far as there are only so many hours in the day, so always put your staff first and make sure they feel appreciated. Staff morale has become a big part of business in recent years and things such as incentives, bonuses and rewards are there to encourage loyal staff members. Setting development plans and encouraging growth internally can also help you get the best out of your team and keep your staff turnover down.
- Dealing with bad payers
Every business owner hits some stage in his or her career where they will be stung by a bad payer, however dealing with them all the time could seriously damage your business. Going into a new business contract blind leaves your company vulnerable, so always run a company credit check on a business before agreeing any contracts. Creditsafe’s company credit reports can show you key financials, performance, plus payment behaviour. This way, you are able to see how well a company pays their bills before agreeing to do business with them, allowing you to forecast their payment into your cashflow.
Take some time out to analyse your business and make sure you aren’t making any of these mistakes! Good luck!