Barriers to launching a business have been lowered and with more than 5million small businesses, Britain is undoubtedly a hub for entrepreneurship.
Despite lockdown restrictions, the pandemic pushed many Britons into launching a businesses – some 800,000 companies were registered in the first year of the pandemic.
But not everyone is so lucky. It’s estimated that nine in 10 start-ups end up failing, and this will only become more painful against a backdrop of supply chain issues, rising energy prices and inflation.
We asked experts, including an investor and an entrepreneur, for some tips on how to survive your first year in business.
The vast majority of startups fail within the first year and the current headwinds are only likely to exacerbate this
Emma Jones CBE, founder of Enterprise Nation
Entrepreneur Emma Jones has fantastic insight into the UK’s small businesses after launching Enterprise Nation to support more than 120,000 small businesses.
She outlines her top tips for budding entrepreneurs to ensure they don’t fall at the first hurdle.
1. Do your research: The first thing to do is make sure you do your research properly. If it’s a food product, test on family and friends and then take it to a wider, less biased audience.
It’s always worth relentlessly researching competitors too. How do they do things, and how can you do things better or more efficiently?
In some cases, it might be worth considering investing in market research. Is there a demand for your product or service, what would people be prepared pay for it? Then work out if that allows you to make enough profit to get through to the next stage of business.
2. Create a business plan: If you haven’t already, you need to invest time in building a business plan. a good way to look at this is I’M OFF: idea, market, operations, financials, and getthroughwork friends – which includes advisers and those who can help you along the way.
You can make a business action plan on Enterprise Nation’s free Strive app with Mastercard. It will take you through everything from finances to marketing strategy.
It helps you remain on track and accountable and hitting the goals can also be very motivating.
Emma Jones CBE is the founder of small business network Enterprise Nation
3. Start selling: Reaching a wider audience straight away without having to invest in a huge marketing budget can be done via powerful global marketplaces like Amazon, Etsy and eBay that will give you easy access to customers in the UK and across the globe.
Customers can also be reached via powerful social media platforms like TikTok and Instagram that now come with an e-commerce function in-built.
4. Get paid: It sounds ridiculous, but having processes in place to make sure you can be paid on time is vital.
Having cash in the bank means you are less likely to have to take on board unnecessary and expensive finance.
If you’re using marketplaces, the cash comes through automatically, but if not, get used to regularly invoicing, and following up to get paid.
Prompt payment is vital for small firms.
5. Upskill and network: Once you’ve got orders or work coming in, start networking to widen your contacts and build skills. We know businesses that take advice or find a mentor, do better than those that don’t.
Joining local groups and attending events now that we can again, is a great way to learn and explore in the business community.
Enterprise Nation runs friendly local meet-ups hosted by Local Leaders. It’s free to join – but you do have to buy your own coffee from independent coffee shops, where we hold the meet-ups.
Ben Law, head of GoDaddy UK and Ireland
Ben Law, who has run his own small business, shares some more tips for budding entrepreneurs.
Like Jones he emphasises the importance of networking with other small business owners, as well as ensuring business and marketing plans are in the best shape.
He also points to the importance of sustainability in the current climate.
Ben Law is the head of GoDaddy UK and Ireland
6. Get your foundations in place: It sounds obvious but making sure you are watertight on the fundamentals is so important for any new business.
Having clear business and marketing plans will enable entrepreneurs to capitalise on growth opportunities and react to issues.
Businesses should have a proven view of their target audience, a clear idea of what is needed to reach profitability and a validated proof of concept.
If you haven’t got all these things in place, it’s worth taking extra time to ensure you are fully prepared to survive your first year.
7. Network, network, network: It’s easy to think that all business owners are out for themselves and won’t be willing to share help and advice, but that couldn’t be further from the truth.
The small business community is a tight knit one, with many entrepreneurs only too happy to help those who are just starting out.
With the prospect of a potential recession looming, you may find others who navigated the 2008 financial crash and can share some sage advice.
When you are meeting people, make sure it’s easy to remember or refer you. A professional email address that includes your business or full name is a good place to start, as is having a business-branded domain name.
8. Don’t cut corners on your e-commerce offer: Whether it’s ordering products and services or doing more research into your brand, consumers are increasingly distrustful of businesses with no online presence.
Establishing a great looking, easy to use website is essential for small businesses in their first year and can be the difference between securing a loyal customer or never seeing them again, and the more of the former you can build in your first year the better.
Your online shop acts as your virtual shop window, and it needs to be as compelling as possible.
For those wanting to launch a new venture or scale up an existing business, I would recommend a website builder like GoDaddy’s online store. Setting up Google Business profiles and social media accounts will also help significantly with SEO.
Jones and Law recommend new business owners network as much as possible
9. Demonstrate your green credentials: Now more than ever consumers are looking to support sustainable businesses.
If a business is to make it through that tough first year, it needs to be built for the future, and being transparent about suppliers and products is an important part of that.
Microbusinesses are in a unique position to embed sustainable practices from their inception.
By embracing environmental sustainability, small businesses aren’t just helping the environment, but they’re opening themselves to a wider customer base that will support the business through year one and beyond.
10. Set yourself targets: Having clear targets will give you a sense of focus and help establish which parts of your business you need to work on.
You can track progress by week, month or quarter in your first year – and make changes to adapt to the market.
Pitfalls to avoid
There is a lot to do in the first year of trading so things like networking might not be your first priority as you get to grips with running a business.
For Andrew Wolfson, who runs Pembroke VCT, an early investor in Pasta Evangelists, startups often get ahead of themselves before establishing the basic fundamentals of the business.
‘In the first year of trading it’s often tempting for founders to try and run before they can walk.
‘We have often heard how founders will build a £100million business. Our advice is to focus on building a £5million one first.’
David Abrahamovitch, chief executive and founder of coffee business Grind, agrees.
He adds: ‘When I speak to small business founders, I’ve found they are often focused on things that just don’t matter at that early stage – they’re worried about registering trademarks or protecting their ideas from competitors.
‘There are some exceptions where of course this is important, but in the vast majority of cases, no one cares, and whilst your business means everything to you, most of the world is not paying any attention.
‘All your effort and money should be going into getting your business off the ground, finding your first customers, making your first hires, and taking this thing from an idea to a real-life business.
‘Of course, you should some basic checking that you’re not using a brand name which already exists – but beyond that, if it starts to work and you’re actually onto something, you can protect these things later on.’