Want to avoid becoming another start-up failure statistic? The Virgin Founder has shared three tips which he believes can take any company onto the next level...
“After seeing so many tech start-ups rocket to billion-dollar buyouts so quickly in the past few years, some new entrepreneurs might mistakenly think that starting a business is an explosive sprint that ends quickly. In reality, it’s an endurance race that only a few survive,” explains Richard Branson in his latest entrepreneur.com blog.
“Business-threatening challenges can pop up at any moment, no matter what you do. However, one of the best ways to protect your enterprise is to make choices with the long term in mind.”
According to Bloomberg, eight out of 10 companies fail within 18 months of opening for business. So how can you make sure that your start-up is among the two that stay healthy? Branson has chosen three key areas that any entrepreneur would do well to focus on.
1. Select your employees wisely
Rather than hiring staff you can’t afford, start small - I began one of my first businesses, Student magazine, from a telephone box with an idea and 300 pounds. Doing all the work by yourself may be difficult, but it will also help you to explore your idea’s strengths and weaknesses more quickly.
When you do have funds to bring in employees, ensure that they understand and buy into the purpose of your business. This will motivate them to go the extra mile to make it a success.
2. Find a mentor
When we launched Virgin Atlantic, my mentor was the great Freddie Laker, the founder of Laker Airways. British Airways muscled his business out of the market long before we came along, and his advice was invaluable in helping me to establish a successful airline, to British Airways’ dismay.
He was the best sort of mentor: an entrepreneur whose business had been in the same sector, so he could warn me when I was about to make a mistake. And as he reminded me, if you do make a mistake, all is not lost; it’s how you learn from such experiences that matters.
3. Choose your clients carefully
When you’re launching your start-up, it may sometimes be tempting to take orders or make deals that you can’t afford to fulfil in hopes of gaining clients. This is almost always a mistake. If your business grows too fast, you’ll likely end up producing an inferior product or service and disappointing those customers - and if you’re unlucky, the entire enterprise will then fall flat.
It may be difficult to take some time out in those first hectic days of launching your business, but before you sign any deal, you must consider the proposal carefully, keeping the bigger picture in mind. Sometimes you may need to pass on an order for the good of a fledgling enterprise. You might lose a little business, but it’s better to focus on building steady growth rather than on gaining quick wins; this is how we’ve been building the Virgin Group for more than 40 years.
The No. 1 killer of start-ups is cash-flow problems, so as you review any new deals, be sure to think about how payments should work. A common issue smaller businesses face is late payments from big corporations, so be sure that you’re clear about payment terms before you sign any agreement. Don’t be afraid to ask for part of the payment up front, if that’s what the health of your enterprise requires.
Have you got any start-up survival tips? Let us know below...