People create startups out of a desire to provide solutions and innovate within a sector of their choosing.
At the start of 2021 alone, 5.5 million small businesses were started in the UK; the first half of the year saw 80 new businesses founded every hour.
Despite this staggering number, 20% of these ventures will fail within their first year, rising to 60% within their initial three years. This is an important statistic to keep in mind if you’re thinking of establishing a startup.
So what are the factors that can help a business reach its full potential?
Better budgeting for better success
Money is the lifeblood of businesses, so your budget needs to cover all of your operations as much as possible. Whether it’s a product you’re producing and shipping or transporting goods, making sure you’ve mapped out how you’re budgeting your costs is crucial.
It should be a key point for any startup to monitor incomings, outgoings and any costs for production and all processes. This may be done by bringing in a dedicated finance officer to oversee costs and revenue, or training an internal member of your team on an online financial course to learn more about the processes.
This way you can have a transparent overview of what you have gained and spent in order to inform the processes and future decision-making of your business.
Passion & the right people
A company is more than just one person. Startups might begin as an idea formed by an individual or a group, but a successful one relies on consistency and strength in passion and work rate at all stages, both in employees and in management.
It would be reductive to just say ‘work with the right people’ because as time progresses, interest and passion can ebb and flow. But when you’re first bringing people in, whether they’re becoming a partner at the top end of the chain or being hired as an employee, you should have a definitive checklist of requirements.
Making sure whoever you’re onboarding has the necessary knowledge and passion for your industry or vision can make or break certain processes for your company. Establishing early what you need from the people you’re trusting to be involved will strengthen every part of how it runs, from administration to production and creative processes.
But it is also important to recognise what burnout and overworking look like. It can be difficult for startups to establish themselves, which can lead to attrition rates as high as 25% – that’s over double the normal rate for businesses.
So managing your expectations and scheduling workloads to create a good balance of work and rest to offer a good quality of life for those in your company will help you retain staff and encourage harder work.
Market is everything
No matter what sector or industry your startup is targeting, there must be a market for what your company will be trading in. You need to carve out a niche for yourself and bring something new to the table that other people in the industry see the benefit in. Or worse, someone else enters the market and outcompetes you on quality and price, rendering your company and output irrelevant.
Similar to how you must hire or partner with people who know the industry inside and out, you must take your research of the industry itself seriously. Knowing the market demands and what your industry requires will make your production much smoother, especially if there are any particular timings required such as seasonal necessities.
Conclusions
There are a whole host of reasons why startups can fail in any industry, but they are easy to get ahead of when given plenty of preparation time. It’s also good to look at startups that have been established in your industry and examine how they’ve succeeded in comparison to the ones that have had a much shorter lifespan.
Your research can absolutely include case studies on what not to do, especially if there are examples from within your sector. Using everything at your disposal for research will build a better foundation in the long run.