Only half of Australian small businesses survive beyond their fourth birthday. While there’s no magic formula for success, there are several things that nearly all growing businesses have in common.
Here are five ways to future-proof your business when starting out:
Calculate cash flow for forecasting
One of the biggest challenges for small businesses is poor cash flow. This is usually a result of being under capitalised from the outset, late payment of invoices, miscalculations of pricing, or overly optimistic sales targets.
No business can survive without a good cash flow calculator, so it’s worth finding a template to get you started. There are various tools to help you track income and outgoings that will make forecasting your all-important cash flow that much easier.
Whether you’re selling a product, or a service, understanding market demand is critical – as is knowing exactly where you fit in that market.
A report on insolvencies in Australia found that 46% of failed businesses suffered poor strategic management, which shows just how important having a clear plan can be. Your strategy should be both a guiding document for the business and outline a vision for potential investors and financiers. It needs to answer the key question: why is your business uniquely qualified to succeed? You can then use this as a reference point for any decisions you need to make.
Work out the ‘why’, first
In order to know who your customers are and what they want, you need to know yourself. Too many small businesses struggle because their owners do not establish their ‘why’ – a tangible reason for being there in the first place.
One TED Talk on business strategy suggests most enterprises are built around a WHAT > HOW > WHY model, whereas some of the most successful leaders work from the inside out. Great business owners know WHY they are in it and HOW they will do it before settling on the WHAT.
Reach out for help
Starting a business may not be easy, but it doesn’t have to be lonely. Finding outside help can be a game changer, both in terms of business direction and your bottom line.
Finding a mentor through groups such as the Small Business Mentoring Service or Women’s Network Australia can give you a new level of objectivity and a provide new resource for ideas, insights and motivation. Working out if your business is eligible for any state and Federal Government grants can also open doors for everything from R&D, wage subsidies to entering foreign markets.
Adapt and learn
Anticipating problems and jumping on new trends are part of a small business owner’s DNA. Astute bosses understand there’s more than one method of operating and are happy to keep things flexible and adapt to make the most of new opportunities.
Thankfully, there are a number of online tools that can help you succeed and learn new skills to boost your business. Kissmetrics is great for learning about marketing and testing methods, while Businessballs is a free training and skills hub used by a range of businesses including multinational companies. Closer to home, the Australian Bureau of Statistics also has a suite of data to help small business owners research trends in their own market and inform their decisions.
It’s easier to prevent potential problems from happening rather having to solve them later. Spending a little time getting things right up front will save you time and money in the long run.
Prospa is Australia’s #1 online lender to small businesses. Prospa understands small business owners need faster finance solutions so that they can make timely decisions quickly and seize opportunities with confidence.