Studies have proven that more than 50% of the start-ups in the UK fail within the first 3 years. After the company formation, entrepreneurs lose control over their business and fail.
The first generation of business accelerators has increased the number of company formations. Making easy and simple to set up a company. The excitement of the first steps (register a company, register the company name, getting the wished domain, etc.) can easily disappear when the company is set up and the entrepreneur has to start running the company with lots of new tasks out of their experience and capabilities.
Many Startup founders get lost in the step between setting up a company and reaching the established goals. Once the initial investments have been spent and the company hasn’t started yet to produce incomes, the payday turns into reinvestments into the new company instead of the so expected reward for all the effort done.
How to set up a business and not to fail in the process?
First of all RESEARCH! Of course, every entrepreneur believes to have found a revolutionary idea to change the world or at least to its economy. Nobody knows how many entrepreneurs failed before setting up the company, however, we can track what happened to the registered companies that failed in the first years of the life cycle. If you want to set up a company minimizing the risks of failure make sure to research the following points:
The IDEA. As your own boss, you need to be able to validate your own idea.
If nobody is doing it, is because others tried it and failed or because you found a Unicorn Idea.
Unicorn startups are revolutionary or disruptive startups that have changed the rules of the game and have become very big and successful, but the chance to become one of them is approximately 1%.
Unique Idea gives you a 1% chance of creating a new company that may be successful.
Optimization of an existing business. There is no such thing a perfect product. Companies that are working on making better products that already exist are more favourable to succeed. But watch out! Don’t rush into amazing ideas you hear about or you see other people are making money with.
Starting a new company is a long process that will change your life, don’t start your company without proper market research. Knowing who are your competitors, who are going to be your clients, how many potential clients could you have, among other questions will define if you should go for it and set up your company or you better look for other ideas.
If you think you may need help while doing the market research, contact an accountant, that will save you time and give a better view of the business reality.
The business plan is a must too. To apply for grants, to get loans, investors or just to know what and how are you going to make your company be successful.
Many passionate entrepreneurs believe so much in their idea that wrongly doesn’t do a business plan from the beginning. MISTAKE!
To start a company will make sure you have a good business plan if you don’t know how to do it click here. Or hire somebody to do it for you, again perfect task for accountants.
Don’t know how
The lack of experience by creating your business is a significant factor of failure, if this is going to be your first company, of course, there are many things you can learn by doing, as to register your company, buy the domain for your company, choosing a name, type, etc. And you should try to do it all by yourself at least once, to gain experience. But seek for assistance.
“Nobody can know what they don’t know”, but somebody with experience will be able to tell you what your missing.
Details matter and many things should be set up from the very first beginning of the company creation, so make sure you’re not missing any taxes, legal, insurance, and any other information. Your best mentor in that matter will be an accountant.
Like everything in life, the commitment will define the probability of success or failure. Put all your passion and energy in your product and you will see how a small seed turns into a strong tree.