n this blog, we’re going to be digging deep into how and why businesses can fail in the first year. But importantly, I’ll also be sharing my top tips when you’re starting a new business, to prevent that from happening. Hey, I’ll hold my hands up here… my first business didn’t go as swimmingly as I’d have liked but did I learn from it? YES.
Am I going to make the same mistakes? NO.
Can I help you to avoid making the same mistakes as I once did? ABSOLUTELY!
Dotty Vintage Weddings – a magazine and wedding blog was my first business. This is where I made my first errors as an entrepreneur. It is simple to summarise why this happened–I just didn’t know what I was doing!
I was entirely self-taught. Whilst I had the determination and drive to develop myself and upskill, I failed to invest in any third-party support. I was pretty narrow-minded and I rarely asked anybody to share their opinions with me. Asking for help happened rarely, and I most certainly didn’t think of the consequences of not branching out for additional support from like-minded individuals or business mentors. Plus, back then in 2012, access to business coaches and online communities just wasn’t as easy or commonplace.
All the pressure of self-development, combined with the lack of support caused me to completely burnout. This eventually led to my business closing, despite having such amazing foundations. Looking back now, I should have invested and been braver. I was so worried that investing would see my business lose money, when in reality, I would have gained so much. I also had a huge amount of self-doubt and a lack of self-confidence in my ability to grow a “proper business”. My side hustle, where I was only ever breaking even, would have expanded and I would have been able to take the leap of faith and make it into my full-time job. But I was stuck in the classic chicken and egg situation as a business owner.
I see so many early-stage entrepreneurs making these mistakes when first starting their brands, having learned so much from making them myself and scrapping that tunnel vision.
I’m ready to share my tips with you, alongside some scary statistics… but fear not. You DO NOT have to become one of these stats!
Data from Fundsquire
It has been reported via Fundsquire that a whopping 42% of start-up businesses fail due to there not being a market need for their services/products. Put simply, a lack of market research means you’ve created something that people don’t really need or want, at least not in the format you’re offering it in anyway.
Additionally, 29% failed due to cash flow issues. This is definitely something I’m seeing more intensively as we’re scaling. Cash flow has become something I have to be across every single day. The number of clients who, when I ask, are unaware of their financial position genuinely terrifies me.
23% failed because they didn’t have the right team in place. I think the fear of outsourcing and scaling is something that rears its ugly head a lot, often fuelled by imposter syndrome around stepping into that leadership role.
19% were simply outcompeted. Their competitor brands did better.
And 18% failed due to pricing and cost issues when they were starting a new business.
So, if you want to avoid becoming one of these statistics, here are my top 5 tips to help you:
Remember what I said earlier about tunnel vision? We don’t want that; you don’t need to put the blinkers on and feel like you must do this alone. Surround yourself with awesome humans, a strong community. Talk to like-minded individuals at events and embrace your support network. I can tell you something, it will be extremely refreshing and rewarding!
Burying your head in the sand is not an advisable approach at all. As I mentioned above, it’s incredibly common for new clients to tell me they have no idea if they are making money or not. Crazy, right? Ensure you are completely comfortable with finances as well as marketing analytics and insights. I highly recommend that you run quarterly reports on the key metrics in your business but with things like revenue and expenses, having daily visibility on those things is very sensible.
Don’t do yourself a disservice by just planning to make ends meet, just getting by, just paying the bills or even matching your old salary. This all needs to exit your mindset completely. It is time to carve out a roadmap that allows you to achieve so much more than this. Have you thought about how much would make a difference for you? What weekly income could change your life? What opportunities would open up if you had more revenue to play with? I always like to encourage clients to have minimum, stretch and ultimate income goals as it gives you ambition and vision.
Investing at the point of starting a new business is a MUST. There’s no avoiding it long-term. Now, I’m not suggesting throwing money at anything and everything but the sooner you get comfortable with the idea of investing your money with the RIGHT people, the better. Consider outsourcing, regular business coaching, scaling, equipment, specialists like accountants and designers as some examples. If the initial cash flow is just not there initially, there are other ways to fund and finance a business. Whilst I’m not encouraging you to purposefully get yourself into debt, you could consider loans, bootstrapping or crowdfunding if you need some upfront capital.
Taking the leap of faith away from your steady 9-5 is daunting, but mapping out your exit plan is the way forward. If you’re juggling full-time hours alongside working on your business, you’re limiting the amount you’re able to work on your real passion. This is why a lot of entrepreneurs reach burnout prior to taking the leap. Create a roadmap that works for you, including timelines and milestones. Make sure the plan is achievable and holds you accountable. This might be reverting to part-time hours, or even moving to another employer in order to free up enough spare time to make your business dreams a reality. If you’re serious about being a full-time business owner, your game plan needs to complement that.
Like I’ve said previously, I have been a statistic of a failed business. I learned so much from the experience and I did things so differently with Ebb, Flow & Grow.
I’ve done all of the things I am suggesting for you. I found my tribe, which I truly believe has been one of the most important factors in the success I’ve experienced. My accountant and I fully understand my numbers – I am looking at them daily, for context. I have planned for profit using the three-stage method – minimum, stretch and ultimate. Once I got to grips with that, I knew I could invest. I knew my limits and I understood what was achievable. And although I jumped into the full-time business owner life long before I was ready to, due to redundancy, I had already mapped out my escape plan over a 2-year period.
And although all of these boxes are now technically ticked, have I become complacent? No. Do I suggest you become complacent? Not at all. Continue to evolve your business and self-development. Look at new investments and explore new ways to connect and expand your tribe. You’ll thank yourself for it!
If you’re feeling inspired and motivated to advance your business forward, we are supporting incredible businesses in our Blossom community which is home to around 40 creative entrepreneurs. Surround yourself with a group of like-minded individuals, access expert strategic advice for your business and discover your brand voice. Want more information? Head over here to discover our membership space
We also have a thorough marketing starter kit course which gives you a step-by-step framework to follow for your brand, removing stress and making marketing fun again. Additionally, you can dive into our branding ebook which gives you incredibly valuable expert advice. Jump right in, both can be found here.
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