- A lot of entrepreneurs jump onto the bandwagon of starting a new small business in today’s competitive marketplace heads first, without proper research, planning and basic preparation.
- No wonder 60% of those newly-opened small businesses fail and even close down in just the first 3 years of their operations not even getting to the fun part of reaching great successes.
- Poor business planning, not detailed enough market research, or no clear understanding of business finances can cause catastrophic results for SMEs. So in order to avoid those, there are 3 things every small business owner must know about.
Small and Medium Businesses are the backbone of the Australian economy. However, what is scary is that the Australian Bureau of Statistics found that more than 60 percent of small businesses cease operations within three years of establishment. According to Dun & Bradsheet, business failures rose 11 percent in the third quarter of 2016 compared to the same quarter in 2015.
Here are 3 things you need to know to help you run a successful small business.
1. Planning and keeping track of your finances
Small businesses often experience seasonal fluctuations in sales. Planning ahead for periods of low sales by keeping additional cash flow from the high sales periods ready will keep your business running smoothly.
According to a survey conducted by Staples, 94% of small business owners claim they are confident in managing their finances, however more than 50% are not familiar with basic accounting principles.
Using small business accounting software that removes the unnecessary features packaged for large corporations is a cost-effective way to help make your life easier. Not all cloud accounting software is the same. Some accounting software programs are better suited to larger corporations. These software programs often package together extra features and functions that you are most likely not going to need, driving up your expenses. Something that we try to avoid at Reckon.
2. Continuously re-evaluate your business plan
You may have had an overarching vision or business plan on where you see this business going when you first began operations. However, it is important to stay adaptable. Re-evaluate and update your business plan on a regular basis, either weekly or monthly, depending on the industry you are operating in.
This strategy will keep you on top of changes in your industry and make sure you have a business model that adapts to the external market conditions outside of your control. Working hard is essential, but also working smarter is equally important as well. Find out more about the common pitfalls successful businesses avoid.
3. The idea is good, but where is your market?
You may have a great small business idea that you are extremely passionate about to start in your neighbourhood. But is the neighbourhood you choose in need of the product/service you are offering?
Quite often we may operate the business in the wrong location where the demand could have been much higher in another area.
Making sure you conduct your market research on who, why they will buy your product/service, and where your target market resides will help you plan ahead and gage how easily it may be to establish your business operations initially. Additionally, seek the advice of other business owners operating within your proposed area to see whether there are any hidden problems that may surface. This can also help you build potential business partnerships which can be hugely beneficial when entering the local market.
Making sure you manage these three things will help you set a solid foundation to succeed in your small business venture.