How to be successful in your first year of trading

Getting a new business off the ground is an exciting time for any entrepreneur. This could be all you’ve dreamed about for years and now you’re in a position to give it your best shot. 

Martyn Jones, a strategic planning and leadership specialist, offers four key considerations to ensure you survive your first year of trading.

Unfortunately, data from the Office for National Statistics shows that a large proportion of new businesses fail within their first year. While some causes of failure will have been beyond anyone’s control, there are some actions that you can take to improve your business’s odds of success in the first year.

There is a clear pattern to the factors that are most commonly to blame for a business failing to survive its first year. The problem is that as a new business owner, you don’t know what it is that you don’t know. 

So, what can you do to prevent your new business from becoming yet another unfortunate statistic?

1.      Write a really clear plan. 

Unless you’re asking someone else to finance your business, you probably don’t need to write a formal business plan but you do need a plan for your new business. As a minimum you must make absolutely sure that you understand:

• Exactly what you’re trying to achieve (your vision of the future) 
• How and in what order you’re going to achieve it (your strategy)
• How much money you need to make and by when
• What might stop you
• What your options are if it does

2.      Fully understand your market

Regardless of what your new idea, product or service is or does it should do one thing – take away a problem. Make sure you completely understand what that problem is and who has that problem (your target market), how you will contact them and what you will tell them (your marketing plan). 

You should do your research thoroughly and know what competition you have, who they are, what they charge (pricing), and what it is that makes you different from them (your competitive advantage).

3.      Watch your cash flow closely

The most common reason for new businesses failing is because they simply run out of money. When you start a business from scratch you have no customers and therefore no income. 

Unless you happen to have invented the latest 'must-have' then it will take longer than you would like to make sales and get paid. 

Before you start, you must be sure that you have sufficient finance behind you to enable you to fund the business and live your life until sufficient payments come in to take the pressure off:

• Minimise your overheads, don’t go for expensive office space if you can work from home for a while.
• Make sure you pay your bills but understand exactly what you’re paying for and whether it is strictly necessary. 
• Avoid giving longer credit periods to your customers than you can afford and don’t be afraid of chasing up late payments.
• Don’t be taken in by friendly salespeople offering you instant success, memberships, or things you don’t need now. Consider how you’ll get value from any purchase.

4.      Take advice

You’re not the first to have started a business. There are a lot of people out there who have travelled that road before you and who can tell you how they got through it. Don’t be afraid to ask for advice. You’ll be surprised by how much support is available to you if you ask.

Sounds too simple? Well, business doesn’t have to be complicated.

About the author

Martyn is an IoD certified director who has had a career in large plcs and has spent the last decade working exclusively with SMEs and charities. 

He currently works as an independent chairman, non-executive director and board adviser with various companies, and he is a Boost & Co member.

Boost is helping Lancashire businesses thrive.
We have a range of funded support programmes and a team of business advisers you can talk to.
To speak to someone from the Growth Hub about business support, contact Boost online or call 0800 488 0057.