If you are a budding entrepreneur looking to make your mark in the world of commerce, you may have given some thought to starting your own business. To oversee your own firm that you have built from the ground up and navigate it toward profitability and success can be a thrilling journey. However, it is important to remember that in today’s highly competitive global marketplace, failure is an ever-present danger in the early years of trading. Approximately 20% of all businesses fail in their first year. This fact is largely independent of the wider economic conditions. Key reasons for failure include a lack of demand for the product or service and an inability to secure adequate funding to keep the business afloat in the early stages of trading. This article seeks to arm entrepreneurs with key pieces of information that will help to ensure the viability of a start-up business in its early years.
Understand your key competitors
Before any capital is committed to your business venture, it is of paramount importance to thoroughly research the market you intend to operate in. You need to be absolutely sure that there is adequate demand for your product or service and that your offering is suitably different from those offered by your competitors. It is vital to fully understand who your key competitors are. How much of the market do they currently provide for? Is their target market exactly the same as yours? What do they do well and where could they improve? Pay a visit to your key competitors’ websites and make notes about what seems to work and what could be improved. If you are going to compete with established companies, you will need to ensure that your product or service is suitably differentiated from theirs so you don’t trigger a price war in an attempt to gain greater market share.
Know your potential customers
Your customer base is directly linked to the overall success or failure of your new enterprise. It is vital to fully understand their habits, tastes, and preferences. You must therefore undertake comprehensive market research into the habits and tastes of your intended target market. There is a range of free statistics and trend information available online that can help you get a better idea of the needs and wants of your potential customer base. Use this information intelligently to inform how you position your product or service. When you begin to create a company website to sell your product or service the website itself must appeal to your target market in terms of its overall design, layout and functionality. It should be understood that every small business needs a slick and professionally designed website to attract and grow their customer base in 2022. It can be a key avenue to developing strong customer relationships, understanding customer preferences, and ensuring repeat custom.
Write a business plan
Every small business needs a well-researched and written business plan. It will allow your business to fully understand its early goals as well as set up a solid structure for the basis of the business’s operation. Having accurate financial projections, including your expected costs and revenue streams in the first few years, will allow you to gauge the overall viability of your venture from an early stage. In addition, a solid business plan can be one of the key pieces of information that allows a business to gain funding from banks and money lenders, which can be vital to ensure that the business stays afloat while it is in the process of growing its customer base. Put simply, your business plan should draw together all your key financial projections and market research into one comprehensive 15-20 page document that will form the basis of the strategic direction and plans for your company. See here for more information on the importance of a comprehensive and well-researched business plan.
In the early stages of any enterprise, there are likely to be some significant start-up costs. Office premises may need to be purchased along with needing capital to produce the goods or fund the equipment needed to provide the service offered. A small team of staff will also likely be needed to undertake various parts of the day-to-day running of the firm, and their salaries will need to be accounted for. At this stage of the business’s life, it is worth considering non dilutive funding methods such as bank loans, grants, or even crowdfunding. A key benefit of non-dilutive funding is that it does not require equity in exchange for capital, so the business owners do not lose a proportion of their overall ownership or control of the business. As mentioned earlier, having a solid business plan with accurate financial projections and market research can be a key piece of information in securing external funding.
Cultivate repeat custom
It is increasingly important in the world of business to ensure that customers return to your company to make repeat purchases and become loyal to your organization. This can be achieved by creating meaningful relationships with your customer base. By gaining first-time customers’ email addresses during the purchase process, you can open the door to targeted marketing campaigns by email to inform them of new products or sales and promotions. In addition, sending your customers short surveys with an incentive for completion (such as free entry into a prize draw or a discount on a subsequent purchase) allows a business to keep track of their views, opinions, and buying behavior. This knowledge can then drive the creation of more tailored products or promotions to cultivate repeat custom.
To sum up
Starting any small business is never a risk-free process, but there are several key ways in which the likelihood of success can be improved. It is incredibly important to have a thorough understanding of both your target market and how they are currently served by your key competitors. A business plan must draw together all your market research and financial projections, as it will both give direction to the early stages of business growth and can be a vital piece of evidence in securing external funding. As the business begins to flourish, it is important to take steps to transform first-time customers into long-term repeat business. This can be achieved by promoting two-way conversations with the customer base and regularly undertaking surveys and research to fully understand their changing habits.