As we celebrate World Entrepreneurs’ Day today (21 August), the spotlight is on the brave souls who venture out into the unknown and realise their ambitions of starting their own businesses. Small businesses are capable of powering the UAE economy, reinvesting into the community and driving innovation at an unprecedented pace.
Yet, failure rates of small businesses are high, with many failing in the first few years, which is the period that is critical to future success. Here are a few vital tips to help you survive the first year of growing pains, and to come out of it stronger than ever.
Don’t ‘wing’ your business plan
If you’re not looking for external funding or a bank loan, it can be tempting to wing it rather than draft a formal business plan. This is a big mistake, as the process of formalising a strategy and planning document can help you sharpen your vision and identify potential pitfalls for your new startup.
The document does not need to be extensive. It should cover key details such as the problem you are trying to solve in your respective market, target customers, milestones such as launch dates, sales objectives, revenue and profit forecasts, funding plans, overheads, and a strengths, weaknesses, opportunities and threats (SWOT) market analysis.
Spend as little as possible
A common reason why new businesses usually fail is that they run out of funding. It is important to keep your cost base as low as possible until you start generating revenues – especially if you have a long sales cycle or need to spend time developing your products and services.
Consider working remotely instead of renting office space, using low-cost digital channels for marketing instead on traditional ads and using monthly subscription cloud-based software instead of buying expensive software licences.
Managing your business finances
A Sage survey in 2018 of startups based in Dubai revealed that 74 percent found accounting and cash flow management the most challenging aspects of business finances. It is important to manage your cash flow through forecasting, that is to estimate how much money you expect will flow into and out of your business over a period of time, and adjust these numbers to balance out so that you don’t run out of cash and risk insolvency.
Business owners who are worried about not effectively managing business finances should find a smart accounting product that can streamline most of these processes, and help entrepreneurs focus on growing their businesses instead of getting bogged down by administrative tasks and risking errors.
Do one thing right before expanding
You might have a great business idea and have plans to develop a global empire straddling multiple verticals, but it makes sense to focus on a single market or product line first. Start in an area you are familiar with, learn as you go, develop a revenue stream, and then scale up to the wider region. If you try to do too much in your early months, you might find your resources spread too thin.
Automate as much as possible
Automate as much of your business as you can, from payroll, invoicing and accounting to marketing and customer relationship management. This will not only save you time, but also help you avoid human errors, such as miscalculating salaries, profit and tax returns for the month, or omitting a zero on a client’s monthly invoice. And you’ll also benefit from easier compliance with tax laws and have access to data you can use to make good business decisions.