It may be a cliche, but numbers simply do not lie. And among such numbers is the fact that almost 50 percent of start-ups die in under five years. While it is a near-impossibility to point out the exact cause of so many business failures, one thing is for sure- the owners suffer from it, immensely.
With this in mind, and there are numerous programs to help ensure you do not end up with a failed enterprise as soon as the numbers profess you will. It is your money, but we share the responsibility. So how do you stave this failure off? Keep reading…
Like any other new entity, your new business may face a number of obstacles. The problems could be cash-related. Challenges could as well be of a managerial nature. To successfully manage these issues, you need:
- Sufficient resources
- Sound business skills
- Adequate mental and physical energy
Keeping tabs on a number of factors may help you to avert or to effectively manage small business start-up problems. Three key operational elements that you need to emphasize include:
- Adequate capitalization
- Regular forecast review
- A vivid, ‘living’ strategic plan
Capital is the ‘fuel’ on which your business should run. Like it happens with a motor vehicle, lack of capital ‘fuel’ inevitably causes the machine (business) to stall. You need to avoid common capitalization blunders such as:
- Having inadequate capital
- Overlooking routine start-up expenses
The above mistakes lead to under-utilization of capital resources held by the business, and unless rectified early enough, could lead to business closure.
Perils of Capital Under-utilization
These mistakes create capital problems at a very critical business phase. During the launch stage, you should be busy delivering excellent services and products. Such exceptional performance could in turn secure and retain consumer confidence in your business. Sustained outstanding performance is likely to create consumer loyalty to your business and its products.
The major downfall associated with underused capital is in their potential to distract and turn your focus to the less important aspects of your firm. Other than complement your business strategic plan, start-up capital shortages harmfully divert your attention to secondary concerns. They force you to concentrate on devising ways of settling business costs at the expense of tackling more important tasks such as marketing. The effects of such distraction can be disastrous to a start-up business.
implement a Strategic Plan
The strategic plan defines your core values, your vision, and your motivation for launching the business. It is different from the business plan. The business plan merely spells out key business elements such as risk evaluation, assumptions, and forecasts. In other words, the business plan is ‘cold’ – it has no life of its own. On the other hand, the strategic plan gives ‘life’ to the business plan. Consequently, your business plan and strategic plan need to be well aligned.
review your Projections…Regularly
Your business plan and fiscal projections should always guide you. Set out times when you assess your business plan to check whether your business is on target. This review will enable you to make any necessary adjustments.
Your start-up business may run into an array of problems. You could face cash crunches or managerial issues. The good thing is that you can efficiently tackle these problems. But how? Your strategic plan needs to be vibrant enough to instill ‘life’ into the business plan. The strategic plan complements the cold, objective business plan by introducing a ‘personal’ dimension. Another tactic of handling start-up problems is making sure that you have adequate capital reserves. Sufficient capital will allow you ample time to manage core business matters such as marketing.
You as well need to consistently evaluate the business performance based on the forecasts spelled out in your business plan. This regular review will enable you to determine whether your business is on track. You can then institute any necessary modifications in time, thereby managing start-up problems.