You learn something new every day when you’re starting a business, sometimes the hard way. So we’ve put together seven tips to help you avoid falling into some of the more common traps.
Manage the stress factor
Going it alone is a big step, especially if it’s your first time. You may be juggling a full time job while working on your business dreams, working long hours and worried that your business won’t make any money. Or that if your new venture isn’t a roaring success straight away then your friends and family will think less of you.
We get it, it’s stressful. But handling the pressure becomes second nature when you know how, and there’s plenty you can do to help ease the burden:
Take time out when you need to - retaining a balanced lifestyle will help you focus better when you need it.
Be sure to make time for family and friends – they all want to help you succeed.
Don’t let initial setbacks get you down – keep a long term view and don’t put unrealistic pressure on yourself.
There's also no need to do everything yourself. Delegating, using outside advisers and building business networks are vital for helping you manage your business effectively.
Many small start-up businesses suffer severe peaks and troughs in their revenue streams. One month they're flat out on a project, the next it’s over and the cash flow has dried up.
Often the business has expanded – taken on staff or moved to bigger premises – too quickly. As a result you now have a bigger payroll and greater overheads. In severe cases this extra load can cause the business to fail.
Here are some solutions to help you keep afloat:
Keep your focus on continued cash flow, even if you have to delegate other responsibilities.
Continue marketing at all times – especially when you’re busy.
Be wary of expanding too quickly – have sustainable long-term revenue streams locked in first.
Think about contracting out instead of taking on permanent staff and overheads.
Create good systems to ensure your business runs efficiently.
Many start-ups fail simply because they haven't done their homework first – and that means plenty of market research.
It may be fine to go with your gut instinct for a while, but proper research is the only way to find out:
Whether your product or service has a market
Who your target market is
The advantages your competition has – and how you can position your business to beat them.
Target your market
Don’t try to be everything to everybody – you could waste a lot of time, effort and money marketing to people who are unlikely to buy your product anyway. Instead, define your target market and focus tightly on them.
Understanding where they live, what their interests are, and what they read or watch will help you target your marketing to the right people. For example, if you’re a tradesman targeting people in your area, simply putting flyers in local mailboxes can be very effective. If you’re targeting a younger audience, social media advertising can be a great way to reach people who share similar characteristics with your target customers.
A start-up cartridge recycling company decided to spend $10,000 a year marketing through various media including (in order of spend): newspaper, leaflet drops, shop signage, vehicle signage and online.
The business then decided to take a 'How did you find us?' survey, which revealed:
36% were existing customers
22% were referral
21% came in as a result of online ads (mainly AdWords)
10% saw the shop front
7% came from the leaflet drop
4% responded to newspaper ads
In fact, almost the opposite to their priority of marketing spend.
They have now changed from newspaper advertising to a customer loyalty and referral campaign, and a bigger focus on online ads.
Retain your customers
You will work hard to attract customers, so it makes sense to keep hold of them. Some businesses fail because they spend all their time attracting new customers, while ignoring those they already have.
To retain your valuable customers and to also gain referral business, put a customer retention plan in place. Think about the lifetime value of your customers and how to get them to spend more.
Make your website work for you
Online marketing is a vital tool for almost every business - and a key part of that is your business website. It doesn’t have to cost the earth, you just need to be smart about the way you use it.
From selling your products and services to enabling your business to be found by new customers, being online is a must. Here’s why:
Your website is ‘open’ 24/7 - so potential customers can browse, research, and if you have the facility, to book and buy online from you whenever they want, not just during your ‘physical’ open hours.
Reach people worldwide - a website also means you can attract international customers, giving you export opportunities.
Better customer experience – people like buying products or services online, the option of an online booking system, and even if you don’t sell your product or service online, customers like researching before they buy.
Reduce costs – this is especially true if you’re doing all your business online. For example, if you’re selling a skin-care range, you’re saving on shelving, displays, rent and rates.
Develop a customer database – you can use your website to build up a database of leads. Providing you have the right privacy statements and opt-in functionality, you can use the contact details you collect to send e-mails and to profile and analyse your customers – another valuable marketing tool.
Build a successful culture
Before you take on your first employee, think about how you can motivate them to help you achieve your business goal.
Remember that your people - including you - are your biggest asset. Keep your workforce happy and they’ll ensure you stay competitive – and attract more great people to your business too. It’s a win-win.
Ensure your business has a vision that everyone can believe in, and offer their input. Give them responsibility, recognise and reward them when they do well.
You might also consider providing key staff with either a profit split, or some attempt to reward consistent effort. Even setting short-term goals and rewarding people with a half-day off can work wonders.
Starting a business can be one of the most exciting and satisfying journeys you’ll go on, and with these tips in mind, we hope your journey is a smooth one.
For more help with getting into business, check out the ANZ Business Start-up Package. If your business is less than two years old, we won’t charge monthly account or transaction fees on your ANZ Business Current Account in the first year* amongst other banking benefits.
This material is provided as a complimentary service of ANZ Bank New Zealand Limited ("bank"). It is prepared based on information and sources the bank believes to be reliable. It is subject to change and is not a substitute for commercial judgement or professional advice, which should be sought prior to acting in reliance on it. To the extent permitted by law the bank disclaims liability or responsibility to any person for any direct or indirect loss or damage that may result from any act or omission by any person in relation to the material.
This material is for information purposes only. Its content is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised financial adviser service under the Financial Advisers Act 2008. It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product. If you wish to consult an ANZ Business Specialist, please contact us on 0800 269 249.