If you’re going into business, then, well, there is something in you that enjoys the thrill of taking a risk. You can’t assume the challenge of creating your own company if you don’t know that there’s a chance it’ll fail. And fail, start-ups do. It’s not as bad as you might think (that ‘90% of startups fail’ thing you might have heard turned out to be false), but it’s not great, either. Only somewhere in the region of 50% of startups will make it to their second birthday. How do you make sure that you’re in the right half of new businesses? You make sure there’s nothing that can bring you down. Here’s how to remove the risk out of your business idea and start working towards long term success.
Have a Business Plan
Not every successful business venture began with a business plan, but yours should. You’ll have a much, much clearer idea about the viability of your startup if you’ve taken the time to think about some of the key aspects that’ll make or break your success. There are plenty of business plan templates out there that you can use as the basis for yours. In it, you’ll be figuring out things like how you’ll make money, what your long term goals are, who you’re trying to sell to, how much money you’ll need, profit margins...and so on and so on. It’ll be a fool proof document that’ll tell whether you have a good idea on your hands or not. Trust the numbers!
Keep A Day Job... For Now
You could put all of your eggs in one basket, but why take that chance? You don’t need to quit your day job to launch a company. Instead, you should be slowly building your company on top of your regular working commitments. Yes, the hours you’ll be working will be long, but it’s much better to have something to fall back on in case the business doesn’t work out. In time, you’ll have a better understanding whether that’ll be the case. You’re unlikely to make any money from your business in the first months, and you’ll surely appreciate having another source of income when it comes to paying rent.
Get Your Money In Order
And talking of money, you should be getting your personal finances in order before making too much of a commitment to your business. It takes a lot of cash to get a startup up and running, and while you might have money coming in from other sources, you’ll be injecting your own money into the project too. This will likely form part of your business plan and will help you figure out how much money you have at your disposal each month (both personal and business money).
Stay Friendly
The development of a company is not the time to make enemies. You will gain nothing from brashly departing from your present company, so make sure you leave on friendly terms. It’s also worthwhile reviewing your employment contract to ensure that you’re not forbidden from setting up a competing company (that is if your business will be a competitor). You will have colleagues at your past job who might be interested in joining you in your new business. There’s no hard and fast rule for this, but it’s not advised to steal all the best players from your best company, at least not straight away.
Avoid Unnecessary Expenses
You’ll have a lot of essential expenses that’ll quickly drain your pot of cash; you can live without the expenses that you don’t really need, no matter how nice they might be. There are ways to help cut financial corners everywhere. Avoid the long term commitments, and don’t waste all your money on expensive advertisements. Instead of renting costly office space, look at working in rentable demountable buildings, which will perform the same role but without the financial burden. The development of a company is not the time to be flashy; your emphasis should be on functionality, anything that allows you to grow your business without compromising your financial health.
Insure, Insure, Insure
Even if you’ve minimized the risks, you’ll still have a lot riding on this venture, and it’s imperative that you get insurance. You can insure against just about anything that can happen, and even insure against your insurance. If you don’t have the budget to insure against every eventually, identify your primary risks and focus on them instead. It’ll eat into your budget a little, sure, but it’s much better to spend a bit more cash rather than lose everything!
Get In Line With Partners
If you have business partners, then it’s important that you draw up contracts, no matter how close or friendly you all might be with one another. There are many advantages to this, but the main reason is that it’ll help reduce petty squabbles that can bring companies down. It’ll also outline the process if someone wants to leave, so they can’t just cut and run and leave you in trouble.
Get The Experts In
You have access to experts, even if your budget doesn’t yet allow you to bring them on board fully. If this is your first startup company, then you’ll have significant gaps in your knowledge that might prove your undoing. Experts such as lawyers and financial advisors can be on hand to fill in your knowledge gaps. They’ll see things that you don’t, offering advice about when to grow, what to spend money on, and so on. Use them wisely.
Work Hard
OK, we know that this one should go without saying, but some people need to hear it. When starting a new company, there is no substitute for hard work! If you’re cutting corners when it comes to effort, then you’ll be the biggest barrier to your success. You can’t expect other people to work hard and believe in your company - which is what every new venture needs if it’s to succeed - if you’re not pulling your weight!
I hope you enjoyed this article about how to minimize the risk of your lean startup failing.
Interested in more articles about startup survival?
Read My Posts:
- 5 Crucial Characteristics To Help Your Startup Survive
- How To Prevent Your Digital Marketing From Failing
Published by Michael J Schiemer
Owner of Bootstrap Business
Money - Marketing - Motivation
Digital Marketing | SEO | Social Media
Mike Schiemer Builds Better Business
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