How To Survive Your First Two Years In Business
With low two-year survival rates for new firms, we speak to business owners who have made it past this important threshold and ask what words of advice they offer…
Ling Valentine of LINGsCARS
“Stop trying to get grants and support; don’t focus on mentoring, events and networking – get on with real work of making profit. And don’t spend a penny more than is necessary. Avoid borrowing. Charge as much as you can and ask for fast payment. Try to build a cash buffer in the bank of three-months, just in case sales slow down or stop. There’s no excuse for not making money in your first year, contrary to what some would have you believe. Businesses fail because they run out of cash. Business survival is the game – making money is the aim. Monitor your cash position religiously.”
Fay Martin of Fay's Studio
“One of the best pieces of advice I was given in my first two years of business was 'there’s no point winking in the dark'. In other words, if you have a great product or service you must take every opportunity to promote it. Word of mouth is so important for a fledgling business and it often leads to great things.”
Adam Ewart of Karacha and Sendmybag
“Don't get too bogged down in the details, go out and get selling. Whenever I meet someone who has spent six months writing a business plan and hasn't sold anything it makes me want to bang my head against the wall. Invest as little as possible and pay your bills on time. In your first two years you are small; you can work from home; work all the hours of the day. Not being burdened with large premises overheads enables you to test the core concept of your business. If you can't make it profitable on a small scale, you won't be able to make it work on a big scale. Negotiate hard with all your suppliers, too.”
Alex Astell of Manage My Website
“Create an attractive brand, high-impact website and strong online presence. Focus on customer service and don’t let your standards slip. Collect customer feedback and act on it. Don’t overspend during the good times, because you may need the money to get you through at other times. Keep your accounts up to date, set aside your tax money, pay your suppliers on time and send invoices out promptly. Don't give up. Early on it would’ve been easy for me to lose hope, as I was bringing in so little money. You must remain positive. Never waiver from the belief that your business will be a success – but it takes hard work, patience and time.”
Ruth Lopardo of loveitloveitloveit
“Be brave. There’ll be times when you question whether you've done the right thing, whether you'll be able to pay your bills and worrying can keep you awake at night. Keep going. Trust your instincts. Have faith in your ideas and be passionate. Also know when to ignore your business plan, because the reality of running a business is different to the theory. Building a business involves a degree of obsession, part of which requires ploughing virtually every penny you make back in to the business to make it bigger and better.”
Sean Price of iBox Security Ltd
“The most important thing is to keep an eye on is your costs. It’s easy to ‘start a business’, get some credit or a loan and buy new equipment, software and an office straight away without being aware of ongoing costs and that you’ll most likely struggle to make ends meet for an undetermined length of time. Marketing yourself is the next crucial task and that doesn’t mean spending a fortune in magazines or online advertising, networking in local business networking groups can often be very worthwhile. Beat expectations; perform your job to your best ability. Show that you really care about your customers, it will help ensure you have a business that will grow and customers to grow with it.”
Jennie & Sarah of Clevercow Cakes
“Start small and grow a bit at a time. All too often, new businesses try to run before they can walk. Don’t try to complicate things either, keep things simple – especially your proposition, that way you’ll sell more. Try to be different, too – you must set yourself apart from your competitors. Find your niche and stick to it. And make the most of all free methods of publicising your business.”
Jake Xu of Xcetra Media
“You must remain realistic – that’s the best advice I could give. Realistic when taking the plunge, realistic about the market you’re targeting and your products and services. Know your strengths but most importantly your weaknesses. Also, you mustn’t try to not to out-grow yourself and let the ambition get the best of you – or to be too cautious and limit the potential growth of your business.”
Naomi Kibble of ROCKTAILS
“Make sure you have the time and the money to launch your business. You can’t have one without the other – and one can’t be substituted for the other. Make sure you plan every step of your start-up journey. If you miss a stage or go about things in the wrong order it could cost you dearly. But remember – a plan is useless without action. Also, I think it’s important to have fun. It’ll be harder work than you imagined, so make sure you’re enjoying it or you’ll never survive.”
Griff Holland of Friska Food
“Having a clear focus, identity and USP is crucial because it’s one of the key ways you’ll increase your visibility and voice as a new player in the market. It’s also important to use your ears and eyes just as much as you use your mouth. Shout about what you’re doing but be prepared to listen and observe your customers and prospective customers’ behaviour and react in a measured way to this. The first two years is all about making your big mistakes and turning a business plan into a living business, as such you’ll need to tweak your offering to make it more commercial.”
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