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Start-up Advice

One-Year Milestone: Smart Thinking That Will Ensure Your Start-Up Makes It Past The First Year

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.

Jack O'Reilly

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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:

Structure

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.

Related: 9 Answers You Need About Yourself Before Starting Your Own Business

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.

Team

business-meeting-team

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.

Legal

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.

Related: The Journey Of Entrepreneurship: How The Tough Get Going

Product

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.

Customers

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.

In closing

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.

Jack is the founding director of O’Reilly Law., a boutique corporate and commercial law firm in Cape Town. Having gained valuable business law expertise while working at reputable law firms in South Africa (with a focus on commercial litigation and corporate transactional work), Jack launched O’Reilly Law, and now advises SMEs, Entrepreneurs and Growth Companies that want to change the lives of the people in their communities, wish to make a meaningful impact in South Africa, and dare to think globally.

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Start-up Advice

Put On Your Wellies: It’s Time To Wade Into Risk

Entrepreneurs aren’t all leaping into the unknown like lemmings off a cliff, but they do need to consider it…

Chris Ogden

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You’ve had a great idea. You’ve looked into its development. You’ve recognised that it has potential beyond just what Auntie Mabel and Mike From The Grocer think. And you’ve clearly nailed a pain point that can make money. Now it is time to take the risk of running with it.

Every big idea comes with risk. You can’t step out into the world of entrepreneurial thinking and business development without it. Your idea may fail. It will also be time consuming, demanding, hungry for money, and hard work. It is unrealistic to expect that your project will leap out into the world and be an unmitigated success.

It is also unrealistic to assume that it isn’t worth taking this risk.

There are steps that you can follow to ensure that your risk is managed so you aren’t blindly leaping off that cliff…

Step 01: Do your research

No, canvassing your neighbours, friends and family is not doing research. You need to know that your idea will appeal to a broad market and that it will have significant legs. This may sound like daft advice, but you would be surprised how many people think an idea will take off just because Susan in Accounting said so.

Step 02: Understand the costs

Projects are hungry for money and investment. Realistically work out your budgets and how much it will cost to take your project off the ground and then stick to it.

A calculated risk is a far better bet than one that shoots from the hip and hopes for the best. You can also use this as an opportunity to draw a clear line under where you will stop investing and end the project. If it keeps eating money and isn’t getting anywhere with results you need to be able to walk away.

Step 03: Know when to walk away

As mentioned before, this can be defined by a line you’ve drawn in the proverbial sand (and budget) but no matter where you draw this line, you have to stick to it. Often, when time, money and energy have been poured into a project it can be incredibly hard to walk away.

You think ‘but I have put so much into this, just one more’ and then it gets to a point where the ‘just one more’ has taken you so far down the line that walking away feels impossible. Leave. Learn the lessons. Apply them to your next project.

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Start-up Advice

Mind The Gap

The entrepreneur’s guide to finding the gaps and building the right solutions.

Chris Ogden

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Innovation may very well be the key to business success but finding the gap into which your innovative thinking can fit is often a lot harder than people realise. Some may be struck by inspiration in the shower, others by that moment of blinding insight in a meeting, however, for most people finding that big idea isn’t that simple. They want to be an entrepreneur and start their own high-growth business, but they need some ideas on how to find that big idea.

Here are five…

1. Network

It sounds trite but networking is actually an excellent way of picking up on patterns and trends in conversation and business problems. The trick is to note them down and pay attention. Soon, you will find patterns emerging and ideas forming.

2. Look for pain

Just as networking can reveal trends in the market, so can spending time reading. The latter will also help you find common business pain points. These are the touchpoints that frustrate people, annoy business owners, affect productivity, or impact employee engagement.

Be the Panado that fixes these pains.

3. Luck

luck

This is probably the most annoying of the ideas, but it is unfortunately (or fortunately) very true. Luck does play a role in helping you capture that big idea. However, luck isn’t just standing around and random people offering you opportunities. Luck is found at networking events, it is found in research and it is found in conversations with other entrepreneurs.

4. Luck needs courage

You may have found the big idea through your network, a pain point or pure blind luck, but if you don’t have the courage to take it and run with it, you will lose it to someone else.

Being bold in business is highly underrated because most people assume that everyone is bold and prepared to take big leaps into the unknown. However, not all brilliant entrepreneurs were ready to throw their family funds to the wind and leap into an idea – they were courageous enough to figure out a way of harnessing their ideas realistically.

5. Pay attention

This is probably one of the most vital ways of finding a gap in the market. Often, people are so busy that they don’t really pay attention to that niggling issue that always bothers them on a commute, or in a mall, or at a meeting. This niggling issue could very well be the next big business opportunity. Pay attention to it and find out if that issue can be solved with your innovative thinking.

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Start-up Advice

5 Things To Know About Your “Toddler” Business

As you navigate this new toddler phase of your business, here are five things to bear in mind.

Catherine Black

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Ah, toddlers. Those irresistible bundles of joy bring a huge amount of energy, curiosity and fun to any family – but there’s also frustration and worry that comes with their unpredictability, as they grow and start to become more independent. If you own a business and it’s successfully past its “infancy” of the first year or so, it’s likely it will also go through a toddler stage of its lifecycle.

Pete Hammond, founder of luxury safari company SafariScapes, agrees with this. “Our business is now three and a half years old, and we’ve found that we’re not yet big enough to justify employing a large team of people to handle the day-to-day admin tasks, yet we still need to grow the business as well,” he says. “As a result, our main challenge is finding the time to step back and see the bigger picture. Kind of like when you are raising a busy toddler and you spend most of your time running after them!”

As you navigate this new toddler phase of your business, here are five things to bear in mind:

1. This too shall pass

Everything in life is temporary – and that goes for both the good and the bad. It’s as helpful to remember this when you’re facing the might of a toddler temper tantrum, as it is when you’re facing throws of uncertainty in your business. If your new(ish) venture is going through a rough patch in its first few years, it can be easy to think about giving up – but don’t. As long as you have an overall big idea that you believe can add value to your customers, keep pushing through the rough parts until you come out the other side.

2. Appreciate what this phase brings

The toddler years mean that the initial newborn joy is officially behind you. But these small humans also bring their own kinds of joy, as you watch them learn new skills, say funny things, and give affection back to you. While your two-year-old business may not hold the same exhilaration for you as it did during those first few months, there are now different things to appreciate about it: Maybe you’re expanding your product range, or employing new people who can take the workload off you.

3. Establish boundaries

Toddlers thrive on boundary and routine – and your toddler business will too. As it grows into a new phase, try and establish limits in terms of the type of clients you want to work with and the type of work you’ll do. It’s also a good idea to make a decision about the hours you’ll work and when you’ll switch off, which will help you establish a good work-life balance.

4. Take a break

Every parent with a toddler needs a break every now and then, even if that means a walk around the block (on your own!), a dinner out with friends, or even a few days away. The same is true for a demanding small business: every so often, remember to take time out to rest properly, where you switch off your laptop and completely unplug. You’ll return much more inspired and resilient to deal with the everyday uncertainty that it brings.

5. Give it space to make mistakes

While the unpredictability of a young business can be stressful and tiring, it’s also a time for trying new things without the risk of huge consequences if they don’t quite work. After all, it’s much simpler to change your USP if you’re a small business employing a few people, rather than a big company where 50 people are relying on you for their salary, or where you’ve received a huge amount of investment capital. While you may fail in some of the things you try with your business (in fact, this is almost guaranteed), see it as a toddler that’s resilient enough to pick itself up, dust its knees and keep moving forward.

During this phase of business growth it’s also essential to have the right type of medical aid cover. There are medical schemes such as Fedhealth which has a number of medical aid options and value-added benefits to ensure that your health and wellness is taken care of too. After all, the healthier you and your staff are, the more productive your business will be – during the toddler (business) stage and beyond.

While this phase can be frustrating, it’s a sign that your business is growing and adapting, rather than remaining in its infancy, and that can only be a good thing! So embrace the difficulties, learn from them, and watch as your business strides forward confidently into the next exciting phase.

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