By Rich Preece, VP and Country Manager, Intuit UK
As the UK economy shifts back into recovery, the start-up scene is booming. 4.6 million people are now their own boss , and this trend certainly isn’t showing any signs of slowing down, particularly in hot spots like London’s Silicon Roundabout, Birmingham and Manchester.
Going solo can bring the ultimate reward: you can become your own boss as well as innovate and think of new ideas. However, there’s no escaping the fact that starting a business can also be inherently risky, with 25% of businesses failing in their first year.
So what are the major pitfalls to avoid and is there such thing as a born entrepreneur that will always get it right?
Identifying common stumbling blocks
You need to have the right reasons to start a business. Doing it because you hate your boss and aren’t happy in your current job is not the answer. Without a genuine passion and belief in the product you want to provide, you’ll never get your business off the ground.
Developing a product that already exists in the market is something else to avoid. While taking on an industry rival might seem like an appealing challenge, if there is nothing unique about your business model, your opponent, with the more established following and reputation, will always come out on top.
Linked to this is developing a product for which there is no market need. Simply having a game-changing idea isn’t enough to succeed: hundreds of hopefuls fail on Dragon’s Den because of one reason – lack of necessity. The same is true of the real world. Without a market hungering for your product, it simply won’t sell.
Once you’re up and running, you need to ensure that you have processes in place to grow the business: a solid plan, a promising customer pipeline, a strong team to support you and perhaps, most importantly, a robust financial management model. Research we recently carried out found that 44% of SMEs had either run out of cash or come very close within the first three years of trading . And, when poor financial management is one the key reasons why so many businesses fail in their early days, ensuring your books are in order from the outset will be critical to your success.
Tied into this is ensuring you always have insight into your business’ performance. Having a single clear view of your finances, and being able to access them rapidly from any location, allows you to make more informed business decisions. For example, you might look at your healthy pipeline and decide it’s time you paid your staff a bonus or ploughed some more investment into R&D. At the other end of the scale, you could avoid a nasty surprise by staying ahead of the game and realising you need to bring in some new customers quickly before it’s too late.
What makes a good entrepreneur?
While the stereotypical entrepreneur might be a 20-something gambler who likes to take risks, the reality is somewhat different. Of course, any successful start-up owner will want to get involved in what’s different, untried and untested, but they will avoid an un-wise gamble at all costs. And, while people aren’t necessarily born entrepreneurs, there are some requisite traits that are often found in entrepreneurs.
Most will display tenacity, a dogged attitude and a tolerance for an uncertain future and risk of failure. What often distinguishes the successful entrepreneur is their genuine refusal to give up, a level of agility to try new ideas at the drop of a hat and a desire to continuously review and improve their model.
Constantly innovating requires a degree of creativity – not to mention energy -and nurturing that trait will be critical to success. Good entrepreneurs can often visualise how they want their future to unfold. They will have a clear picture of what direction they want their company to take and how they will guide it from conception to realisation. Finally, they have self-confidence in bucket loads. They have to be 100 per cent certain that their product is something that the market needs.
So if you think you have what it takes to start a business, now is the time to do your due diligence. Immerse yourself in your product, the market and your competitors to ensure you have all bases covered. Above all, preparation is key: only once you’re absolutely certain you’re ready should you open your doors for business.