When you start a small business, it’s one of the most exciting feelings in the world. Registering the business, getting that first sale, seeing all your hard work come together. The future is filled to the brim with possibilities.
But sometimes, months down the line, reality sets in and you realise how hard it is to keep cash flow going, pay off suppliers and business loans, pay staff if you have, build your customer base, and manage the startup costs you never anticipated.
If this sounds like your business, we have some practical insights for you on how you maybe got here and what your next steps should be.
Where Do I Go From Here?
Not all successful startups last, and not all startups are successful. If you’ve been asking yourself this question or feeling like you are stuck, there could be several directions for you to take from here. In South Africa, it is easy to start a company, but delivering viable products, capitalising on investment opportunities, and executing a sound strategy to deliver profits is another ball game.
Here are some aspects you can look into to improve the prospects of your early-stage company:
Get Your Pricing Right
Are you so overpriced that customers aren’t buying from you? Are you underpricing all the competition but making a loss? The first thing to do is to consider your pricing strategy. Different types of businesses should have varying strategies, but what’s true for all startups is that you want to reverse engineer it.
In your financial plan, you can note down all of your business expenses, including capital, overhead, and staff wages, as well as what kind of salary you want to draw, and work backwards from there. You need to be able to cover all of these expenses and pay yourself, right? Once you know what this figure is, you can then work out how much you should be charging for your goods or services in order to be profitable.
Pivot if Necessary
Having a product that isn’t viable can be a very hard truth to face for a business owner who has poured countless hours and effort into a company, but every business must adapt with the times. If your services or goods are no longer selling, you can think about whether there’s a target market for them—or is the target audience demanding something else? You can consider this carefully and think about how to pivot, if necessary, back into a viable business. There’s nothing wrong with having to redo your business plan to match what you offer to what the market wants.
Attract the Right Customers
Business owners need to do a fair amount of research on their target audience. This is arguably the most important aspect of running a successful business. If you’re attracting the wrong crowd, you’ll never make a sale.
One way to do market research on your target market is to look at the social media platforms of your competitors. What kind of people are interacting with and following their brand? While they don’t always match 1:1 with paying customers, social media followers are a good gauge as to what kind of people are interested in your product or service.
Track Your Income and Cash Flow
The first thing to do is to get rid of that Excel sheet and invest a little money every month into accounting software. We promise, it will change your life and is worth every cent.
If you can afford it, you can find an accountant to help you out. This doesn’t even need to be a monthly expense—it can be ad hoc. You can ask for help around getting to grips with your cash flow and how much money you’re actually bringing in. A bonus is that an accountant can also help you submit your tax returns when they’re due.
Get Back to Why You Started This Business
If you’re feeling a little beaten down, remember why you started your business in the first place. Think of that very first business idea you had from which everything else evolved. Sometimes, a little inspiration and refocus can do more than we think. Often, when we can lay aside anxieties and reawaken the dream, profitable business ideas surface.
Give Yourself More Time, But…
Remember, new businesses aren’t successful overnight. All the people and brands you admire took years. Plenty late nights and missing social events is routine for an entrepreneur. It takes a long period of time for most businesses to see success—sometimes, it’s years.
But, having said that, it’s not going to happen without the hard work and due diligence that’s required. To be successful, you will need to do your financial projections, figure out your target audience, do the math to price your goods and services correctly, find potential investors, cultivate ideas, spend time allowing market analysis to guide your next steps, and hustle hustle hustle.
If you have a truly viable business, it’s worth approaching angel investors or venture capitalists about your business idea. A venture capitalist will know a good thing when they see it, and if you really believe your startup has legs, it could be the solution to your problems. They could help with startup costs and marketing strategies that, on your own, you might never be able to do. Just make sure you have a solid business plan in place when approaching an investor.
Cover for the Future
One thing that is vital for any company’s success is business insurance. This cover is typically tailored for each unique startup, so you pay for only what you need, and get none of what you don’t. To get an insurance quote, simply fill in the form on our website and you’ll get a call from one of our trusted insurance partners, so you can get the cover that best suits your brilliant business.