1. Start with a problem, not a solution
‘No market need’ comes in at number one on the CBInsights list, with a whopping 42% of failed businesses citing it as a reason for their demise. What that tells us is that far too many entrepreneurs try to launch a product or service without first establishing whether their target customers want it (enough to actually pay for it).
If you’re developing a new business idea, the smart place to start is with what people actually need. Get out there, talk to potential customers, and genuinely listen to what they have to say. What are their frustrations? What wastes their time, consumes their resources, or stops them getting the job done?
Once you have the problem, you have the market need – and then you can figure out how to solve it.
2. Keep the cash flowing
Turnover doesn’t equal liquidity, and lack of cash can bring even the most profitable business to its knees. Small businesses are highly exposed to problems like bad debts or cash flow fluctuations, so it’s vital that you have a buffer for your working capital.
Getting funding as a small business isn’t as tricky as it might sound. Gone are the days of going cap-in-hand to high-street banks – a quick online search will turn up scores of alternative lenders with a greater appetite for risk, who are well placed to offer loans to small businesses (in exchange for a higher interest rate, of course).
Shaun McGowan from Lend, a small business loans provider says, “With financial intelligence and advanced scoring matrix's we can literally approve and fund a customer inside 72 hours. This sort of speed allows our customers to grab opportunities as they are available”.
Before you dive into any financing arrangement be sure you know who you’re dealing with, what the terms and conditions are, and exactly what you’ll be paying – be sure to shop around, and if you’re in any doubt, get professional advice.
3. Build a dream team
Good business is about good teamwork. One thing every successful entrepreneur has in common is that they’re surrounded by great people whose strengths complement their own.
In addition to the specific expertise you might need to develop your product or deliver your service, there are several core skills that every business needs: financial management, marketing and business strategy. Without those, you have very little chance of transforming your good idea into a viable business.
When you start building your team, look for people who share your vision and passion, and have expertise in the areas where you lack experience.
The Australian Government Small Business website has a tonne of advice and free resources to help you get started.
4. Get quality advisors
No matter how strong your management team is, you’ll still need plenty of expert advice as you begin to grow your business.
By engaging a strong, supportive team of professional advisors (e.g. accountants, lawyers, business mentors) you can make sure you’re doing everything required to meet your regulatory, legal and financial obligations – so you can focus on managing your core business.
5. Walk before you run
Another fatal mistake for many small businesses is trying to do too much, too fast. In the early stages your priorities should be establishing your place in the market, building your reputation and earning the loyalty of your customers.
That means meeting your customers’ core need in the most simple and effective way possible. You can all the fancy functionality later, once people recognise the value of what you do for them.
Likewise, the grand offices and national expansion can follow once you’ve got a viable business with a solid trading history under your belt.
6. Be ready to pivot
There’s only one thing you can be certain of in business today: nothing is certain. With disruptive businesses popping up every day, turning traditional business models on their head, the single most valuable survival trait for any business owner is agility.
Never stop listening to your customers, watch your market like a hawk, keep an eye on your competitors and emerging technology – and be ready to respond to changes with innovative new ideas or a swift change of direction.