By Lynsey J. Bowen
1. Use a mentor. The benefits of a mentor when starting up your business are many but one of the biggest is that you have an expert at hand to discuss things with before you do them.
Having a mentor can; provide impartial advice, give you the benefits of their experience with startups and signpost you to some of the best resources available.
2. Market research
Understanding both your target market (customers), the market conditions and your competition are the three main areas of market research you need to focus on as a startup. However, as your business grows, there will be other elements of market research you will need to draw on to ensure you are doing everything you can to remain competitive.
Without this knowledge, both as a startup and as a growing business, you will be significantly disadvantaging your business.
3. Talk to their peers
It is easy to become isolated as a new startup. There is the tendency to view everyone else as competition or a threat to what you are trying to achieve, but this isn’t the case. There is much to be gained from talking to your peers about your ideas, your business and your future plans.
Your peers can offer an outsiders perspective, keeping your business fresh, but also, they can share the benefits of their experiences and stop you making the same mistakes they made.
4. Understand your niche
This point is very much linked to our second point about market research: Every business will have a niche they are targeting and understanding that niche will be essential if your startup is going to succeed.
Expect to have to be flexible with your niche because it is not uncommon for businesses to evolve into something different from their original business plan as they grow.
5. Forecast the numbers
Forecasting is an essential part of all successful businesses and starts at the idea stage and continues until you either sell or wind up the business. Forecasting is a business best practise that can help you to make better decisions, avoid expensive mistakes and help you to better manage your cash flow.
For more information read 8 Reasons you can’t afford to ignore financial forecasting.
6. Be realistic in your projections
It is easy to get carried away with sales forecasts and projections, especially if you get a big order early on. The best way to approach your projections is to base them on realistic data. This could be industry averages, previous figures or market research (competitor’s data).
You could also forecast your numbers three times; worst case scenario, most likely case and best case scenario. This would give you an average spread for your projections and help you to make decisions accordingly.
7. Make informed decisions
Forewarned is forearmed and this could not be more true than in the case of startups and SMEs. The more information and data you have to hand, the easier it is to make important decisions you can be confident in.
When faced with a problem in your business, it is far easier to make a decision if you know what the consequences are first. The more data you have to hand, the easier this becomes. Understand your numbers and decisions become easier.
8. Employ the right people, at the right time
Having the right people, with the right cultural fit for your business is essential to building a successful business.
However, it doesn’t stop there – knowing exactly when it is the right time to invest in staff for your business can be a tricky thing as wages can have a direct impact on your cash flow long before the additional resource will have a positive impact on productivity.
Again, understanding the numbers and forecasting the impact of taking on staff will help you to make a decision about when’s the best time to start employing the right people.
9. Manage cash flow carefully
Cash flow is the lifeblood of any business and, if not managed carefully, can cause real problems. As a startup, it is often the last thing you think about and many are often caught out by cash flow problems.
If you get into the habit early on, of forecasting your cash flow on a regular basis, you will be able to see if there are any problems coming and put remedial actions in place ahead of time. Equally, regular forecasting will allow you to see which variables of your cash flow are actually causing the problems. Don’t get caught out, start forecasting your cash flow now.
Lynsey J. Bowen is the marketing manager at FINANSCAPES, a cloud-based forecasting tool that provides professional, error-free forecasts to reduce the risk of start-ups and increase SME growth rate. FINANSCAPES was developed with more than 10 years experience working in start-up and SME finance. FINANSCAPES is the simplest, easiest way to forecast your profitability and cash flow. Connect with @finanscapes on Twitter.