According to some statistics, 30 per cent of new businesses close within the first two years of being open. That’s a little less than a third, and while the number may not seem particularly high, it should still be of concern to any entrepreneur looking to begin a business soon. The predominant reason for failure is a lack of finances, and this is where we will be directing our attention in this article. In short, how can a startup avoid a financial disaster, and consequently sidestep failure?
There are at least five ways to reduce the risk.
Have finances in place at the beginning
Not many businesses can operate without some kind of financial backup at the onset of opening. There needs to be enough money in the entrepreneur’s bank account to cover the costs of what’s needed for the business before profits come in. Funds can be acquired through crowdfunding, angel investing, and a loan search of available providers. With enough money to cover startup costs and the immediate future, the entrepreneur is off to a good start.
To ensure success, finding ways to save money is a must. You can discover some of the methods available in the linked article. The other thing the entrepreneur needs to do is put some of the money saved into an emergency fund. There will be financial hardships ahead; those months when there is a downturn in profits, or when a sudden disaster damages business finances. However, provided there is money in place to cover any emergency situation, the financial losses will be minimised.
We all recognise the need to be insured in our private lives, as we never know when disaster might strike. And the same relates to business. With insurance in place, perhaps to cover a burglary on business premises, or to protect certain assets, there will be less financial damage. To learn more about what insurance may be needed, this simple guide will point you in the right direction.
This is a no-brainer, but the harder the work put in, the higher the rewards. An extra effort needs to be put into marketing, ensuring word gets out about the business. There needs to be effort put into customer service, using a number of methods to retain those people who are the lifeblood of any business. And there needs to be an effort to produce quality work, as the company’s reputation will suffer if the workmanship is substandard.
Seek financial help
The best thing an entrepreneur can do at the very outset of starting up is to secure the services on an accountant. With advice on budgeting, as well as sorting out such things as business taxes, the help offered with be invaluable. Particularly for those business owners who aren’t money-savvy, the expense of hiring an accountant is a wise financial decision.
By following the simple guidelines offered here, there is less chance of business failure. Should you run a business yourself, or if you are in the early stages of putting something together, taking steps to follow our advice will put you on the pathway to success.