Starting your own business is not for the faint-hearted and those who do so quickly learn to swim or else face sinking their project before it gets going. There are long hours, difficult decisions to make and many sleepless nights, but once your business becomes a success all of the hard work becomes worth it.
However, those with an entrepreneurial spirit should know that 20% of UK start-ups fail within their first year of operations while over 50% have failed within five years. Of course, no one goes into business expecting to fail and small business owners must ride their luck, adopt a smart strategy and work hard. To ensure that your endeavours aren’t going to waste, here’s a checklist of some common mistakes to avoid for start-up success.
Not hiring the right people
To take your fledgling business from a one-man-band operation to something a little larger you’re going to need to hire some staff. You may realise you require staff a bit too late as you get more and more swamped and the temptation may be to just get anybody in to help out.
Small and medium businesses must take their recruitment seriously as each employee they bring onboard represents a bigger percentage of their workforce in relation to that of a larger-sized corporation. If you are the sole ’employee’ in your company, hiring just one more person to work alongside you represents 50% of your workforce, so you need them to hit the ground running and be the perfect fit.
Common hiring mistakes by start-ups include:
- Not knowing what role you are filling. Before you consider any candidates you need to know what you are hiring them for. Clearly define what you need any additional staff members to do, whether they be an all-rounder to fill in in multiple departments or a specialist who can elevate your knowledge, understanding and technical skills to another level.
- Basing decisions on first impressions. While they count for a lot, first impressions alone shouldn’t dictate who you hire. Make sure you assess their skills and ensure they meet the requirements for the job. It’s also important to check their references to build a better picture of the candidate.
- Not seeking a diverse workforce. In some ways, hiring someone similar to yourself or your team members helps with getting the ball rolling. However, it’s important to consider a diverse portfolio of candidates to help your company grow and learn to think and see things from a different perspective.
You aren’t going to be a recruitment expert from the get-go (unless that’s your business model) but it’s essential to learn from each hire that you and your company do. Be prepared to adapt to what prospective employees are seeking to create a positive company culture, such as flexible hours, remote working patterns, company benefits and ongoing training opportunities. Each time you interview a candidate, you have the opportunity to refine your process and create a hiring system that rarely fails.
A bad hire can cost your company money trying to replace them, reduce productivity and even impact team morale, making it essential to nail the recruitment process as quickly as possible.
Missing out on investment and funding
Typically, businesses need money to survive and while a company must make plenty of profit and put aside funds to secure their long-term future, there are other ways of gaining capital. Seeking investment is something that many start-ups go through, whether that’s through a bank loan, remortgaging your house or finding an investor.
When your company begins trading it’s useful to find further investment opportunities that can get you to your milestones and goals as quickly as possible. Investment schemes like SEIS, provide tax relief and lower-risk investment opportunities for investors to help start-ups grow.
Start-ups are a great way for investors to get in on the ground floor and help provide financial support to businesses that interest them. Those funds raised must be spent within just a few years, ensuring that they are used to help give a start-up the leg-up it deserves.
Start-ups can make themselves more attractive to investors by:
- Networking and creating a strong social media presence
- Outlining clear goals and sticking to them without wavering
- Creating a great pitch and delivering with confidence
- Maintaining a push for growth by investing in their team and business responsibly
There are government funding options too, from R&D Tax Credits to innovation grants and the Patent Box while crowdfunding and debt financing should also be pursued.
Short-term thinking
It’s not unusual for start-ups to experience rapid growth and changes aplenty in just a few short years. This short-term success can become the sole focus of a business owner, and taking their eye off the long-term project can spell disaster.
While they can change as success grows, long-term goals must never be forgotten. The desire to return profits as quickly as possible can impact the ability of a company to grow organically. There is a danger in only thinking about the short-term that a start-up can burn brightly but only for a limited time.
Balancing short-term needs against long-term goals and ambitions is a challenge for all businesses, but many established businesses have fail-safes, such as cash reserves, and historical clients they can rely on to get them through lean times. New businesses don’t necessarily have that luxury and they must progressively establish themselves to protect their long-term interests and safety.
The risks of only thinking in the short-term include:
- Creating an unhealthy culture of excessive workloads
- Glossing over a lack of performance and productivity in a team or workforce
- Setting a bad example and precedent for the future
Neglecting digital marketing
Companies must have an online presence and a digital identity to succeed in today’s world, and this is even more true for start-ups. While established businesses can rely on their reputations, start-ups must be noticed if they are to succeed. With a staggering 97% of people learning more about a business online than anywhere else, your success must be visible when people are searching for your business keywords.
Local SEO (search engine optimisation) techniques are particularly effective for small businesses, these include:
- Entering the right name and address in online directories
- Creating a Google Business Profile, including opening hours, reviews and company description
- Optimising website content for a local audience
- Creating a mobile-friendly website
Digital marketing will be key to your success and while it may not be your primary concern, it should feature in your short to medium-term strategies to boost your internet ranking potential.