5 Things to Do Before You Start a New Business [Infographic]

 

Infographic: Startup Failure Rates Say Most Who Start a New Business Will Fail

No one wants their new business to fail.

Statistically speaking, every new business has a better chance to fail than to succeed. Consider the numbers: After four years, fewer than six in ten businesses in any of these industries are still open:

• 58% – Finance, Insurance or Real Estate
• 56% – Education, Health or Agriculture
• 55% – Services
• 54% – Wholesale
• 51% – Mining
• 49% – Manufacturing
• 47% – Construction or Retail
• 45% – Transportation, Communication or utilities
• 37% – Information (IT)

Can you increase your startup’s odds of succeeding?

Yes! You can increase your startup’s chances of succeeding by careful planning, especially in those areas that owner’s whose businesses did not survive agreed were most important. No matter how prepared you think you are, you’re going to hit a few bumps and have a few surprises after you start your business. Based on the experience of other startups, it’s very likely they’ll be in one of these five areas.

5 Things to Master Before You Start a New Business

1. Marketing

Many business owners think “marketing” is about how they’ll reach their target audiences. And it is; however, promotion is just one of the four Ps of marketing. The other three – pricing, placement and positioning – are just as critical. Viewed holistically, these four pillars of marketing can help you avoid the mistakes made by business owners whose startups failed; such as:

• Lack of demand
• Competing ineffectively
• Product deficiencies
• Bad timing
• Inability to stay focused
• Didn’t respond to market place changes or challenges quickly enough

For one in ten failed startups, a bad business location made it difficult to succeed. Before you choose a location and start a new business, you might want to check out:

Top 10 Best States for Startups which lists the ten best and worst states for starting a new company and has five tips that can help your business thrive, no matter where it’s located.

5 Tips for Choosing the Right Business Location which offers five tips for choosing the right business location that can help you zero in on the best one for your business.

2. Financing

It’s probably no surprise to find that many failed startups say they simply ran out of money. It’s common for startup business owners to underestimate the financial demands that will be made on their business during early months. All of which will only be exacerbated for business owners who don’t have a solid marketing plan in place that addresses the marketing problems we discussed above.

Pricing, while actually one of the four pillars of marketing, will definitely affect the financial health of your company when you start a new business. The other challenges that failed startup owners cited were:

• Running out of money (inadequate working capital reserves, poor income to expense ratios, etc.)
• Costs were too high (or prices too low)
• Didn’t have the right business model in place
• Had problems with investors
• Couldn’t get investors on board

Before you start a new business, make accurate (and detailed) projections about what things will cost and what early sales revenues are likely to be. If you don’t have much in the way of working capital reserves, you might also want to seek out financial partners who are ready to help you face the ups and downs that go along with starting a new company can help.

3. People

If you have ever heard someone say “This job would be wonderful if it weren’t for the people,” you’ve stumbled onto something many new business owners overlook: People problems. People are unpredictable. People have bad days. People change their minds. People don’t always react the way you think they will. People aren’t all passionate about their work. A lot of failed startups point to people problems:

• Didn’t have the right people in place
• Ignored their customers
• Had problems with their investors
• Lacked passion
• Burned out

Having the right people on board as employees, investors, suppliers and even customers is essential to the health and well-being of your enterprise. Before you start a new business you need to have a clear idea about what its culture will be and what type of people you need to have on board. Mood board, buyer personas, thoughtful vendor vetting and hiring for culture and fit (as much as for skills or knowledge) can all help you avoid these problems.

4. Battle Plans

Yes, we know it’s marketing but this area of business ownership deserves a spot all its own. Understanding where your business and its products services fit in the marketplace, developing unique selling points and thoughtfully considering the customer experience at your business (vs. every alternative) is critical to its success. If you don’t have a plan for winning market share, competitors may eat you alive. Startups listed seven specific ways they were outcompeted:

• Not enough buyers (target market was too small)
• Too many competitors
• Didn’t understand buyer behaviors and preferences
• Didn’t do competitive research
• Failed to differentiate from competitors offering
• Weren’t as relevant to the target market
• Weren’t as responsive and agile as competitors

5. Who’s Going to Help

It may not take a village to raise a child but the more expertise you have access to when you start a new business, the better. Many of the business owners whose startups failed didn’t have the right people on board, nor did they have the right mentors and investors in place.

Scroll down to see the whole infographic, courtesy of DB Squared business finance at – https://www.dbsquaredinc.com/top-reasons-businesses-fail-infographic/

Hit us up! We’d love to help you draft a startup business marketing plan that helps you check off these five important areas and more. Contact us using the form below:

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Source: 5 Reasons Startups Fail Infographic – https://www.dbsquaredinc.com/top-reasons-businesses-fail-infographic/ via DB Squared Business Finance