If you’re thinking about starting your own business (and more and more people are in the UK) one of the risks you need to be aware of is that new small businesses frequently fail. Sometimes – indeed often – it’s due to factors beyond the control of the owner.
If you’ve been running a small business for a year and a national or multinational competitor moves into town, you’ll be lucky to survive the slow bleed of customers and revenue as your market is at best split, or at worst fatally compromised. Changes in legislation can leave your costs soaring – recent changes in guidelines lights and lightbulbs is putting a lot of small theatres in danger as they need to replace all their lights to meet new rules. For businesses that survive month to month on a small margin having a big cost like this imposed from the top down can be the last straw.
Perhaps worse than being sunk by a big one off cost is slowly losing your profits due to a change that eats into your margins: leaving the EU is increasing the cost of bringing materials, goods and talent in from Europe for UK companies, and having to shutter your business due to simple logistics is extremely disheartening.
Some problems, though, you can anticipate and plan against. Businesses that fail due to self-imposed problems could have done better and issues like this that we’re taking a look at today.
Planning and Budgeting
If you want to start a business you will of course need a business plan: a document that sets out your goals, your methods for achieving them and the research showing how they are achievable.
The problem many people run into is that their plan only accounts for how things will go under a single, unchanging set of circumstances. You can build for long term success before you make your first phone call by taking longer over your planning, and building in redundancies and contingencies to cover situations where your hopes don’t materialise. Having a plan in place from day one to deal with how you’ll adapt if you face more competition than expected means if that does happen, you won’t be caught on the fly, and will be able to react competently and seamlessly.
Developing Infrastructure
One way small businesses fall down in the early days is a lack of specialist knowledge for key back office roles. You’re a single person with a small team and you’re a specialist in selling your product, not necessarily setting up your supply chain, coming up with the most efficient inventory system or even handling day to day HR concerns like tracking holiday! If that sort of thing gets away from you, you’ll find yourself disappointing clients with unexpected shortages of goods or personnel!
Interim Management offers a solution: investing a bit of capital in an interim specialist to come in in the early days and impart their knowledge and experience will leave you with a robust system that will carry you through until you can expand and hire permanent staff to cover these areas.
If you’re looking for Interim Management, UK firms are experiencing something of a boom so you have plenty of choice!