The first year of entrepreneurship is always the toughest. Long hours, countless teething problems, hundreds of bills to pay, and even more cups of coffee.
The truth is that many start-ups don’t make it past the first year. Reasons may include insufficient market research, leading to a product or service that no one wants or needs; not having a comprehensive marketing and distribution plan in place; not having enough human resources to execute plans; and simply not having the perseverance to push through challenging times.
That said, thousands of entrepreneurs DO make it first year. In fact, many of them come out with a thriving business.
So, if you are determined to make it in your first year, make sure you have these five key elements in place:
Often it happens that your business takes off at lightning speed. Although you are initially thrilled, you quickly realise that things can just as quickly go wrong. Things aren’t going as planned, employees and customers are complaining, yet you can’t find time to manage and rescue it all. The answer here is structure.
You need a comprehensive vision and action plan. Nothing will work sustainably without it.
Finances: don’t try to wing this. Get accounting software from day one. Track your finances religiously and have daily, weekly and monthly financial reports issued.
Follow profitability per product, per service, per week, per customer and per department.
Organise: Spend time upfront to learn and implement organised systems. It will save you thousands of hours in the long term. Find a system and stick with it. Trello, for example, is a great tool to create boards and lists for daily, weekly and monthly tasks that need attention. Whatever organisational system you choose (there are many out there), be disciplined enough to look at, and update them every morning.
Surround yourself with positive individuals and competent co-founders from the start. These early cheerleaders will help you through the tough times. Don’t try to do it all. It just won’t work. Include people who have different strengths to you. And remember, 10% of a R100 Million Rand company is worth more than 100% of a R1 Million Rand company.)
Delegate. Start-up founders often make the early mistake of trying to do everything themselves and not hiring more team members before they need to. Anticipate growth and hire accordingly.
You may be the most capable multi-tasker on the planet, yet learning to delegate and entrust others with responsibility, is the only way you will build a lasting business.
Incorporate your company and open a bank account. This is probably the most obvious things you need to do, yet it is often overlooked. If you are serious about growing your business, you need to have a business identity. Sending your customers your personal banking details to make payment, sets an unprofessional tone from the start.
Having a separate legal entity further limits your personal liability, should something go horribly wrong.
Furthermore, be sure to formalise your relationship with your fellow business partners and/ or start-up founders. It’s extremely important for each shareholder in your company to know exactly what is expected of them.
By formalising this relationship with a shareholder or founders’ agreement, you can avoid having those awkward founder disputes and power struggles.
Not having clarity in this area wastes crucial time that should be focussed on building value in the business.
The core and fundamental requirement of any business is to sell something that people actually want. If you approach 20 people right now, you’ll easily come back with 20 new ideas for products or services.
Having an idea is easy. But, building something that solves a problem or need isn’t that simple.
Product-market fit is the golden rule for any start-up. This requires you to be in a good, growing market with a product that can satisfy this market. It is essential to understand this fundamental principle or your business will fail.
If you aren’t satisfying the market, it is essential to be honest about it as soon as possible. Don’t wait until you run out of money. Have the courage and vision to adapt and change your offering.
The rationale for every business is to attract customers to purchase its products and services. Without customers, there is simply no reason for any business to operate. Your goal, however, shouldn’t be only to create an awesome product or business; it should also be to help your customer.
Research your customer. Do your research and get to know your customer during your first year of business. If you understand their needs, you are able to adapt accordingly. If your customer sees you as a brand that exists to understand their needs, they will be more loyal to you – increasing sales.
By executing on your research you’ll be able to lower your cost of customer acquisition and reduce your churn (drop-off rate i.e. customers unsubscribing/ not coming back for more).
And of course, keeping your customers happy and building trust with them will result in referrals, which is a much-needed revenue resource for any business in their first year.
The process of launching a start-up and leading it down the path towards success requires stamina. It is sometimes a very lonely and depressing journey with lots of roller coaster moments. Enjoy celebrating the small successes, however keep your eye on the ball and don’t get distracted from your vision.
Starting your own business is tough – there’s no two ways around it. However, if you have the right attitude and apply these key principles, you can be your own success story.