StartupSmart may be heading unscathed towards its first birthday on Thursday, but it’s clear that many start-ups don’t manage to make it that far or merely limp to their first anniversary.
Worrying new figures show that nearly 10,000 businesses entered administration in the 2011 financial year, a 5.9% rise on the previous year.
To help avoid further fledgling enterprises joining this unwanted list, we’ve put together the 10 things you need to get on top of in your first year in business.
“The first year of any business is a process of discovery and learning,” says MPR Group partner Marc Peskett. “You need to find out what your business model is, your value proposition and who your customers are.”
“It’s a bit like having a new born baby. You don’t know what it’s like until you are in the middle of it.”
If your start-up is approaching its first birthday, make sure that you have as many of these milestones ticked off as possible.
Not many successful businesses stick rigidly to their original business plans, failing to adapt to the lessons and pitfalls of entrepreneurship.
A year into your venture, you should have at least slightly redefined your proposition, based on what has worked and what hasn’t throughout the 12 months.
“No business is exactly the same as when it started,” says Julia Bickerstaff, founder of consultancy the Business Bakery.
“Don’t get hung up on your original plan. A good example is the person who invented PayPal – he wanted a payment system for Palm Pilots but everyone wanted to demo it for the web. He kept saying no until eBay asked him to do a web version for them.”
Once you’ve come up with a great idea, it’s tempting to plough ahead with the intricacies of your business, convinced that you will soon be feted as the success you are surely destined to be.
Such an approach overlooks the key element that will make or break your company – customers.
“I meet so many product-centric businesses who say ‘No’ when I ask them if they’ve talked to their customers,” says Andrew Birt, co-founder of business incubator AngelCube.
“You need to talk to your customers or you don’t know anything about your proposition, consumer pain points or your competition. From day one, talk to people. Some people leave it a good nine months. It’s crazy.”
If your business disappeared tomorrow, who would miss it? What would the marketplace lack as a result? In short, would anyone actually care, other than you?
Hopefully, your business is fixing a problem in the marketplace. It is offering something new, different or improved on what went before. A year in, the market should be a poorer place without your start-up, even if it doesn’t know it yet.
“If you’re going to do anything in your first year, make sure that you fix something lousy,” says Birt. “That’s what Xero did – they looked at the existing market, saw that it was ordinary and they built something better.”
“Sir Richard Branson fixes something lousy every time he launches a business. There are thousands of customer pain points you can help solve.”
If you have a business partner, after a year together at the start-up coalface, you should have a good idea whether the relationship will last.
If the business is suffering because of a dysfunctional partnership, you should act before you things go much further. Usually, bad partnerships end within the first year.
“You need a partner who doesn’t have overlapping skills – if they are good at sales, for example, you should be great at branding,” says Birt.
“I see too many people go into business with their friends without looking at whether their skillsets are complementary.”
It’s unlikely that you’ll be rivalling the golden arches of McDonald’s in terms of brand recognition within your first year, but your business should at least be causing ripples in its industry.
Seek to become a thought leader in your sector via Twitter or Facebook, especially if you have a B2B proposition. If you are consumer-facing, hone in on your target market and be visible where they are, whether that’s New Idea magazine or nightclubs.
“You need to work out what your brand stands for,” says Peskett. “Don’t try to achieve perfection. You have licence to try something new that risk-adverse established businesses won’t want to do.”
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