Take a look on Google and you will find hundreds of articles on how to start up a new business. It’s unsurprising, given that on both sides of the Atlantic, entrepreneurship and new business creation are at an all time high. All those articles are helpful, even if most of them say materially the same thing, but where they fall short is in their scope. Starting up a business and getting it trading on Day One is fine. But then what?
We’ve all heard the various statistics cited by different sources that say anything from 40 to 80 percent of businesses fail in the first two years. In fact, the numbers don’t matter. The point is that a new business needs to work hard to grow in a controlled way if it wants to survive long enough to be termed an old one.
Think before you scale
Practically every business plan you see will have ambitious growth plans for its first few years. It is as if entrepreneurs assume it is a rule that they have to achieve 300 percent growth within 36 months or everyone will call them a failure. Take a step back and really think about it. If scaling is going to demand a massive injection of resources and a whole rethink of your business model, will the numbers really be any better than staying small, lean and bespoke?
Make tech your friend
Every business is reliant on technology, but that means more than having your smartphone to hand or accepting digital payments. Critically assess every aspect of your business processes to see what can be automated or ideally outsourced. Also, look at potential pinch points. If you’ve ever wondered what is backorder, now is the time to explore the tools and software, as keeping up with an expanding order book can be one of the main growing pains for a small business.
For many start ups, the business and its owner are synonymous. That’s not necessarily a bad thing from a marketing and brand awareness angle, and people from Richard Branson to Elon Musk have used their personality as a marketing tool. However, as recent events at Tesla have elegantly demonstrated, this can sometimes be a double edged sword.
From a business growth perspective, succession planning is vital, and you need to be confident that the organisation will continue to thrive if you retire, get run over by a bus or, indeed, say something injudicious on social media.
Always watch the cash flow
The single largest threat to a new business is running out of cash, and this risk increases when you are trying to scale up. Watch your cash position like a hawk, and explore contingency measures such as revolving credit or an invoice financing facility, so that you can ride any troughs brought about by major capital expenditures or problems with late payers. It is far better to get these tools in place when business is good than to be desperately searching in order to pay workforce and suppliers on time.