Startup Business Advice: Survive the Startup Failure Rate and Build a Business That Lasts
We’re in the Entrepreneurial Renaissance Age and business startups quickly rise and unfortunately drop just as fast. In their most recent report, the Small Business Association advised that 78.5% of new establishments survived their first year in the United States. And that’s just the survival rate; most new companies don’t turn a profit quickly. For many, it’ll take years to reach a breakeven point.
To be truly successful, you must give your business the time needed to mature, strengthen and grow. A year is not going to cut it in the saturated markets we live in. The SBA shares that only 50% of new businesses last 5 years; 33% will last 10 years or longer. Personally, we’ve lasted over 30 years; first opening our digital call center in 1986.
Our Startup Business Advice to ensure you also make the 33% long-term success rate is to prepare your business for the fatal battlefield of today’s markets. In this article, we focus on really knowing:
- • Your Business;
- • Your Competition; and,
- • Knowing Why Other Startup Businesses Failed.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – Sun Tzu
Know Your Business
Improper planning is cited as one of the main reasons a small business will go out of business. Increase your chance of succeeding by making a detailed business plan before you incorporate.
To get you started in the right direction, here are some helpful tips that’ll increase your personal knowledge about your business and industry:
- • Perform extensive research on the industry you’re looking to enter.
- • Closely examine all applicable business models and choose wisely from the beginning.
- • Build complete transparency and perform due diligence with all business partners.
- • Have short-term and long-term strategies for pricing your products/services.
- • Establish a solid unique selling proposition to stand out from your competitors.
- • Develop a marketing plan and strategy to initially reach and bring in new customers.
- • Create a detailed and realistic startup cost analysis. (Here’s a great resource that’ll help)
- • To avoid burnout, create an ideal work-life balance time management plan.
Lastly, know your strengths and weaknesses before stepping up to the plate. Lead with your strengths and be sure to collaborate with people that can help you with your weaknesses.
Know Your Competition
Get to know your direct competitors and gain an intimate insight into your industry. Don’t try and reinvent the wheel; learn from your competition and build a better business with the intel you find.
Our startup business advice is to focus on these 3 areas when performing your competitive analysis:
- 1.) Who is your competition?
List out the top 3 competitors that you’ll be in direct competition with. Study their brand; look at their internet presence and website content. How does their business differ from yours; what are your similarities? Learn what you can about the history of the business and business owners. Find out the inside scoop of what the employees say about the business on an employer review site like Glass Door.
- 2.) What do they offer?
Research your competitor’s product details and price points. Fully understand why your offer price is higher or lower than your competition. What is your competitor’s unique selling point(s)? What are the positive and negative reviews they’ve received from customers who purchased their product or service?
- 3.) What is their marketing approach?
Perform a Google search of a product or service you share with your competition. Do your competitors appear on the first page of the Google search results? Is your competition active and popular on social media? Can you sign up for a newsletter on their website? How often does your competition post new content; how often do they blog? What are the reoccurring subjects and/or areas that your competition writes about?
Entrepreneurship in a Box has a helpful guide that details how to get to know your competition thoroughly: 22 Questions About Your Competition.
Know Why Other Startups Failed
According to the most recent statistics provided by the SBA, from 2004 to 2014:
- • An average of 78.5% of new establishments survived one year.
- • About half of all establishments survive five years or longer.
- • About one-third of establishments survive 10 years or longer.
We recently quoted Fortune Magazine concerning Why Startup Businesses Fail, and according to their founders, these are the most popular reasons your new business will go under:
- 1.) No Market Need (42%)
- 2.) Cash Issues (29%)
- 3.) Not the Right Team (23%)
- 4.) Pricing/Cost Issues (18%)
- 5.) Ignored Customers (14%)
Take a good, hard look at the stats above. Go through your business plan and make certain that the above pitfalls are accounted for and considered. Don’t be the entrepreneur that didn’t take the time to learn from historical mistakes.
As if the five reasons for failure aren’t enough of an obstacle, here are the top administrative complications a new startup business owner will encounter:
- • Poorly organized administrative policies and procedures.
- • Accounting, invoicing and record-keeping errors that prevent steady cashflow.
- • Carrying out all business responsibility without a competent partner or support staff.
- • No time or resources to provide quality customer service to new customers.
These common mistakes are your business’s enemies. To know your enemy, you have to dig deep and really take the time to research each of these pitfalls. When you can combat each obstacle with a solution, you’ll be in a better position to succeed out in the real world.
Your Startup Business Needs Affordable Help
Our last bit of startup business advice is to hire a virtual customer service and telephone support team. With rates as low as $19.95 per month, you can actually afford our experts to help provide your new customers with 24-hour assistance.
Give us a call today at 1-800-785-6161 to speak with an account specialist during a free initial consultation.
Want to learn more about how a digital answering service charges? Read, How Much Does an Answering Service Cost, and learn about all the fees associated with outsourcing your business lines.