Ricochet News

Starting a new business? Here's your year one survival guide

By Colin Timmis, General Country Manager, Xero SA and professional accountant - Jan 23, 2019
Starting a new business? Here's your year one survival guide

If you’re starting a business this year, you’ve probably anticipated many potential pitfalls and have planned for them. But entrepreneurial life has a way of throwing curveballs even for the most scrupulously prepared.

To avoid some of these pitfalls, check out our tips for year one of running your business.

  • Think ahead

Anyone who starts a business for instant gratification must take a lot of pleasure in frustration, disappointment, and loss. Don’t expect to make money in your first year. In fact, expect to lose money and be prepared for that eventuality. The animating philosophy behind most successful business owners is the same one used by most bodybuilders – no pain, no gain. If you’re starting as a scrawny, 40-kilogram weakling who couldn’t lift a teacup without getting a hernia, you’re not going to become Mr. Universe overnight.

The short-term pain of potentially losing money will, if you have a sufficiently good business plan and enough start-up capital, be replaced by the long-term gains of meeting your entrepreneurial goals. If current woes are getting you and your employees down, having a sense of direction tends to focus the mind as you strive for more growth.

  • Keep expenses low

It’s easy to get carried away when you get started: you hear talk of new businesses with ping pong tables, nap pods, astroturf, games consoles, and various wellness-enhancing bells and whistles, and you think “I want my workplace to be that.”

And maybe you do. That’s a fine aspiration to have. But in the early stages, it should remain an aspiration. There’s something to be said for starting small. If you buy too much, hire too many people, and aren’t strategic about your overheads, you could find yourself drowning in unnecessary costs.

So, keep it lean and mean at first. Find creative ways to save money. If you don’t interact with clients in your workspace, do you really need an office? If you don’t have two employees, do you really need that ping pong table?

The list of unnecessary expenses can grow easily and exponentially. Don’t let it.

  • Gather and measure

The right data can provide a decisive edge for any new business. If you can see what is and isn’t working in the early stages you can prevent small problems from becoming critical issues and you can spot opportunities that you might otherwise have missed.

So, gather and measure information from the get-go: click-through rates, social media engagement, purchase history and more. It’ll help you improve your customer experience by getting a sense of what customers like and don’t like, and it’ll help you predict how they might interact with your brand in the future. If your decisions aren’t driven by data, they might not be the best decisions. Get comfortable using data early on.

  • Get a mentor

Here’s the thing about mistakes: very few of them are original. However you screw up, and you will, someone’s probably done it before.

So get a mentor to tell you how they messed up; how they handled it; and what they wish they had known before it happened. Ask someone you know for the necessary guidance or if you don’t know anyone attend networking events and local forums until you find the right fit.

With the proper guidance you’ll know where the big potholes in the road are and how to avoid them.

  • Use technology. Seriously.

Not every tool out there will be useful and some will be downright irrelevant. Nonetheless, if you’re not using technology as much as you can, you’re not making the most of your resources. Cloud technology, automation, and other innovations have improved the speed, transparency and efficiency of the modern enterprise.

At Xero, we’ve designed our accounting software to do just that, for example helping you manage expenses anywhere and at any time. We also offer integrations with over 700 complementary apps, which allow you to design a solution that speaks to your specific needs.

In year one and beyond, be sure you have the plan, the people and the tools you need to succeed.

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