5 Things To Take Note of to Avoid Business Failure

No one starting a new business wants to contemplate failure, but you’ve probably heard the statistic that nearly half of all new businesses fail within the first five years.

However, by being aware of problem areas and avoiding common reasons for failure, you’ll be more likely to avoid this trap. Focusing on these five areas will go along way towards helping you succeed.

Plan for Success

Before taking the leap to start a new business, do your homework. Consider not just your hobbies and passions, but what you think you could do long term without being bored. Take note of your strengths and weaknesses, but realize that weak points don’t necessarily negate an idea. You can always hire someone to cover areas where you lack knowledge, experience or passion.

Research the market space for the new venture you’re considering. Creating a competitive analysis will help you better identify and understand your potential competition. Once you have identified a few competitors, study their social media tactics. Who are they targeting? Who follows them, and what kind of feedback do they receive? Customer comments and complaints may make you aware of an unaddressed issue or guide you to a new way of approaching a problem.

Financial Planning

Figure out your cash flow needs for your new business and be prepared to not show a profit for a certain length of time. Financial start-up requirements obviously vary depending on the type of company you’re starting, but there are thousands of sites providing information and statistics to help you plan. If possible, reach out to others who have done the same thing and get their advice. Look for blogs and forums where you can ask questions and exchange tips.

Choosing the right type of accountant for your business early in the process will make your life easier in many ways, especially if you’re not strong at record keeping. In fact, for many small businesses, an accountant is the first outside help they hire, and for good reason.

Establish Your Brand

Creating a strong company identity is vital to standing out from your competition. Here are some points to consider when defining your brand:

• Focus – What one or two words define your company and the experience you want your customers to have?
• Experience – What feeling do you want customers to have about your company? How do you want them to feel when using your product or service?
• Credibility – What can you do to assure customers of your comment to quality and consistency? How will they know you can be trusted to deliver what you promise?
• Make it personal – Customers are much more likely to be loyal to your brand if you create something that speaks to them. How can your message give them something to aspire to or become part of?

Create a Unique Selling Proposition

Establishing a unique selling proposition (USP) is key to strengthening your brand.

You need to let the market know how your business is different. What do you specialize in? At this time, you may also be eligible to establish intellectual property protection for your USP or key drivers of this.

What do you do better than your competition?

If you’ve done a competitive analysis and given some thought to the branding questions above, you’ve probably got some ideas about what to focus on to stand out.

In addition to looking at your competition, thinking about the customers you want can help you formulate your USP:

• Who is your ideal customer?
• What problem can your product or service help them solve? What do they most want from your company?
• What motivates them to make a purchase, and why will they choose your business over the competition?

If you understand potential customers’ problems and show them how your business will help them, you’ve gone a long way towards gaining their trust and loyalty.

Excel at Customer Service

When first starting out, your focus will necessarily be on acquiring new customers. But as your company grows, don’t forget to put time and energy into customer retention. In a recent survey, 63% of marketers stated that acquiring new customers is the most important goal of advertising/marketing, but your existing loyal customer base has a greater value.

It can cost seven times more to acquire a new customer than to retain an existing one, so making customer service a priority is just good business practice. Create a social media presence and start a blog on your site so that customers have a way to communicate and feel heard. Conduct occasional surveys and ask for customer feedback and testimonials to understand the strengths and weaknesses of your customer service. When your customers feel heard and cared for, they’ll keep coming back.

Starting a new company is never easy. But to increase your odds of succeeding, focus on your company identity and understanding your competition and customers. And don’t be afraid to ask for advice. Planning and research can go along way towards helping your new company become a success.

Useful Resources

• Business Plan Template
• Marketing Plan Templates

This was written by Robert J Kramers. Like what you read? you can follow him on Twitter.