Essential Tips On How To Build A More Successful Startup
For any new business owner, building and operating a start-up business is time consuming and takes a lot of hard work. Building a successful business is what any business owner wants, however not all business owners know how to gain success from their newly developed enterprise. If you’re struggling on how to gain more success, this expert guide will help you understand the key tips on how to build a more successful start-up business. Let’s get started.
Successful Start-Up Tips For New Business Owners
- Begin With The End In Mind
To create a successful start-up you need to begin with the end in mind. What does this mean? It means that you need to have a clear vision of what your successful business looks like in order to make it become a reality. For instance, you need to consider the volume of sales revenue you need to achieve in order to cover your financial outgoings in order to turn a profit. So this involves calculating your cost of sales and forecasting your expenses in order to determine whether your start-up will be financially viable.
Once you have a clear picture of what success looks like, you can develop a plan with the key steps and activities you need to undertake in order to get there. This includes such things as your distribution channels, whether you require plant, equipment and staff, as well as other overheads and logistical considerations. Allocate time frames for completing each task and a timeline that indicates which tasks need to be completed first, before other co-dependent tasks and activities can commence. This is the essence of business planning.
Having a business plan, with clear milestones and time frames will:
- Provide you with a clear indication of weekly, monthly, and yearly targets to work towards including sales, revenue and profitability targets.
- Allow you to plan effectively; from managing cash flow, through to managing and allocating resources.
- Provide you with measurable indicators as to whether you are on track to reach your goals.
- Provide you with business intelligence (reports) that allow you to manage your business effectively.
Many businesses start out in the hope that business growth will simply happen organically, however without a clear plan you may find that things quickly run off the rails. The old adage is true – if you fail to plan, you plan to fail.
When creating a plan, here’s some things you should consider:
- Know your goals and what steps you need to take in order to reach your goals.
- Forecast any obstacles that you may encounter along the way which could challenge you and how you reach your goals. Work out ways to get around these challenges.
- Investigate and understand who your audience and competition is so you can better market yourself to become an industry leader.
- Work out how much finances you need and prepare a financial forecast of revenue and expenses you anticipate over a 12-month period.
- Be realistic with your plan and your timeline. Sometimes certain goals may take longer to reach than others.
- Build upon your plan every 12 months so you continuously have a strong direction of where the business is going and what you need to do to succeed.
- Don’t Take On Debt You Can’t Afford
Debt is one of the reasons why a new business fails. New business owners often take the risk of borrowing more than they can afford, and then find that their business income is less than they anticipated – especially in the early months or years when the business is just becoming established.
When building your start up and throughout its journey, it’s important to avoid taking on more debt than you can afford. For example: Don’t spend large amounts of money on an abundance of stock if you’re not certain whether there’s demand for it. Instead purchase a smaller stock amount and if it appears to be selling quickly, reorder another batch before your stock runs out. Some other ways to help avoid debt is:
- Cut Costs Which Aren’t Helping Your Overall Business – Identify parts of your business which are causing you to spend money more than make money. This will help you to free up more cash to put into areas of your business that are making money.
- Revise Your Budget – It’s a good idea to regularly revise your budget to know whether you can afford to spend more or not. Don’t forget to add in additional costs such as property rental and utility bills.
- Prioritise Debt Payments – It’s important to priorities your debts to ensure you start paying them off more efficiently. Work with your trading partners to establish and agree on terms of payment that are realistic and financially viable for both parties.
- Invest in your Business Wisely – If you want to purchase new equipment or technology in order to help your business, only do so if you have business intelligence that supports and confirms that it will legitimately add value through increased efficiency, increased productivity or reduced costs before making a purchasing decision.
Unnecessary debt is a forerunner for business failure. Don’t be caught accumulating debt when you don’t need to.
- Manage Your Cash Flow Effectively
Managing your cash flow in any business is important and determines whether you sink or swim. In fact, poor cash flow management is one of the main reasons why businesses fail. Here’s some helpful tips on how you can manage your cash flow more effectively.
- Set Cashflow Targets – A good way to manage your cashflow is to setup and maintain cashflow forecasts. You can do this on a weekly or monthly basis to help you work out how your cashflow will be in the next 12 months.
- Manage Your Outgoings Wisely – Take advantage of discounts for early payments. Utility providers often offer incentives for early payments, and penalties for late payments, so it pays to manage these wisely.
- Set Clear Payment Terms – Payment terms are important to make sure you get paid on time. It’s difficult to manage your cash flow if you haven’t setup realistic and clear payment terms to your clients and customers. It’s not unusual for a small to medium business operator to have payment terms of 7 to 14 days. Why offer 30 days if you don’t have to?
- Invoice Quickly – In order to get your cash in, you need to invoice quickly. While it may take you 7 to 14 days to get the cash in, at least you’ve sent your invoice as quickly as possible after the service is complete.
- Follow up on late payments – Don’t allow creditors to get out of hand. For example if you haven’t been paid within 30 days, issue follow up reminders to late payers and if necessary engage a debt collector to pursue clients who simply fail to pay at all.
- Offer Multiple Payment Options – To encourage clients to pay you promptly, offer multiple payment options such as Bpay, direct deposit and Eftpos. This helps those who prefer a certain payment option to easily pay on time.
These are just some of the best ways you can manage your cash flow more effectively. By keeping up to date with your cash flow, you’ll be able to manage your business more effectively.
Building a successful start-up business is all about knowing the finer points of business. By considering these key areas you’ll have the capacity to help improve you chance overall to build a successful start-up business that you can turn into a profitable enterprise at a later date. So, are you going to utilize any of these tips?
Steven McMeechan is a strategic marketing and communications specialist with over twenty years’ experience in senior marketing management roles across a range of industries including Information Technology and Financial Services. He works for Capstone Financial Planning and lives in Melbourne Australia.