5 fundamental things I learnt in my first year as a startup
If you are planning to launch a business, you will learn a lot in the first 12 months. Building the foundation for your business is crucial if you want to achieve a successful business operation over the long-term. Business owners are likely to go through a steep learning curve whereby they will learn lessons from the mistakes that they have made and the adaptation required by the business’s operation to succeed. To maximise the best opportunity for success, we recommend implementing the following steps into your business.
Ensure that you manage a positive cash flow.
It doesn’t matter if your business is making a few hundred dollars per month or a few million dollars per month, the success of your business is dependant on its ability to maintain a positive cash flow. This means the business needs to manage its income and expenses, while making sure that there is profit at the end of each month. It is essential that business owners track their income and expenditure so they can manage it accordingly. If the business has enough income to hire a bookkeeper or accountant, then they can track these expenses for you. If not, then you can opt for bookkeeping software or SAAS programs such as MYOB and XERO to manage your business’s cash flow. Review your cashflow reports frequently (ideally once a month) and identify any potential income revenue or expense threats that need to be managed.
New business development requirements.
Sales revenue is what drives the success of the business. The business needs to have a new business generation model that will consistently bring in new pipeline leads to generate sales for the business. It is essential that you invest in marketing activities that will allow your business to generate new sales. If your business has enough income to invest in a new business development team, you will be able to have dedicated staff developing new business opportunities for you 100% of the time. If you find your resources are limited with few or no staff, you will need to dedicate up to 20% of your time to generating new business.
Each industry sector has a rate of client attrition where clients are lost. The only way you will build your business is by developing new clients higher than the rate of attrition for your business.
Managing your business’s insurance
It is vital that you select the right type of insurance that will protect your business and yourself. If you are self-employed and you are in a position where you are unable to work, you won’t be able to earn any income let alone pay any of the bills that you may incur. To protect yourself from this risk, you will need to look into the relevant business and life insurance policies on offer. The team from Vfps.com.au are experts that can help to point you in the right direction should you need to seek advice.
Managing risks with your business.
There are several risks that your business is presented with. You need to build a team of advisors that can aid with protecting your business. This includes but isn’t limited to:
- Financial advisors
- Marketing advisors
- Legal Advisors
- Security advisors
- IT advisors
Don’t be afraid to test out different marketing initiatives.
If you want to give your business the best chance of succeeding, your business needs to continually test new things to see what will work and what won’t. You will need to make a calculated decision to manage the financial risk to the business. Investing in one opportunity may reap you ten times the return while others may fail and reap nothing at all. If you don’t try it, you will never know.
Building a startup has its challenges. More than 90% of startups fail within the first 2 years mainly because of the problems to manage the issues presented above. Focus on managing these areas of your business diligently over the building phase of your startup and you will be sure to succeed in the long run!