There are commentators that claim 90% of start ups fail. On the other hand, a report from the Australian Bureau of Statistics shows that of all start ups founded in 2009, 47.5% were still going in 2012-13.
Those are pretty good odds, or pretty depressing ones, depending on whose stats you choose to believe. Either way, what can you do to make sure your start up is alive and kicking a year from now? Well, it depends a bit on you and it depends a bit on the product or service you are offering. Here are ways to increase the odds of joining those start ups that make it past their first 365 days.
Make sure you have all the finance in place
Near enough is not good enough when it comes to the investment capital that goes into your start up. If you have 90% of the finance, wait until you have 100%. Why? Because you drew up a business plan, right? And in that plan you laid out how much it was going to cost to buy/create your product, how much of a margin you would make on each sale and how much it was going to cost to buy the equipment to make/store the product. On top of that, you had running costs – rent, electricity, insurance – that would have come to come out of your initial investment capital until you made some sales.
That’s why if you start with only 90% if the finance you need, one of those factors – manufacture, merchandising, equipment purchase – isn’t going to happen. You might be able to buy the equipment but not rent the warehouse, or create the product but have no funds to merchandise it. Your business plan is a compass that shows you the way, it’s a map detailing the route you will take. You ignore it at your peril.
Create something that people didn’t know they needed
At the heart of every start up is novelty – start ups, unlike traditional businesses, create a need that didn’t previously exist. Who would have thought politicians and CEOs would air their thoughts publicly and frankly or journalists would share breaking news for free? That’s Twitter. Who imagined that ordinary people would pay to travel in strangers’ cars? That’s Uber. Each business fulfilled a new need, a need it created.
Design is also important. Think of the distinctive ‘bird’ image of Twitter, or the simple font of the iPhone brand. Great design is like a good window display, it lures us towards the product. It’s a good idea to hire a professional designer to create your logo and brand identity. Think of the value of those golden arches to McDonald’s and try to create something as simple and direct. You can also subvert people’s expectations. Uber’s website is glossy and classy, with attractive images of high-end cars. It’s deliberately working against the fear that your Uber driver will turn up in a rusty old wreck.
Are you a good businessperson or just good at what you do?
Just because you enjoy painting doesn’t mean you should open an art gallery. Whatever it is you are selling, you need business skills. There are many free courses you can do online, or you can join your local chamber of commerce and talk to people who are already running their business.
Keep in mind that start ups need to be tech savvy, you need to use every cost-cutting advantage to get your initial running costs down. To send a fax online, as well as large files, get a toll free fax number that works off your email client. It turns your PC or smartphone into a fax machine, but you can also send large files as attachments far bigger than your email provider currently allows – up to 1GB.
Depending on who you listen to, your start up has a near 50% chance of succeeding or a 10% chance. By making smart decisions early on and by creating a need where there is none yet, you’ll find yourself in the winning percentile.