How to keep the lifeblood of region's economy going strong
With the number of start-up businesses on the rise, Andrew Finley, commercial director at Oxford Innovation, provides some insight into how they can survive and grow in 2013.
The average rate of start-up companies in the UK was up 3.8% in the third quarter of 2012, and in the Westcountry, Cornwall continues to lead the way. It's great to see so many new businesses budding but when you consider that, on average, only about half will last beyond their first 18 months, it's clear they need to take the right steps to ensure they survive.
At Oxford Innovation our role is to support and develop high-growth businesses in Cornwall and the Isles of Scilly, whether they are just starting up or are well established. With a survival rate of 95% for the start-up businesses that we work with, we know a thing or two about what makes a successful enterprise.
Starting your own business is a challenge and it is one that more and more of us are considering – recent research from Sage suggests one in four people in the UK aspires to launch a business.
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The government also appears to have realised that it needs to be more pro-enterprise and help boost small and medium-sized enterprises (SMEs). The Autumn Statement showed that SMEs are seen as a key factor in our economic growth.
In the Westcountry most people work for small businesses and they are the lifeblood of our economy. Therefore, we need start-ups to prosper.
So what are the fundamentals that start-up SMEs need to consider in 2013 to make sure they thrive and expand?
Be clear about your personal aims and goals. Starting a business is hard work. The reason why so many new businesses fail in the first 18 months is because it is so challenging and passions can wane when the going gets tough. Be honest with yourself, because there may well come a time when you question the whole venture. What do you want to get from the business and what are you prepared to give up to make it work? Long hours and little financial reward in the early stages is part of the deal.
Are you filling a genuine need? Have you thoroughly assessed your potential market place? Is there a genuine demand for the product or service you want to provide?
It is often worth asking yourself whether you would buy this product or service. Often a passion for something may not be shared by enough people to make a viable business.
What is your unique selling proposition (or USP)? If you think there is a space for your business in the market then what makes yours different? Why would potential customers choose your product or service over another? Defining what makes you different is essential.
Be honest about your attitude to risk. Starting your own business is risky and you will need funding at some point. Therefore, you will need to take some calculated risk. If you aren't prepared to risk financial loss then starting your own business may not be for you.
Be flexible. As previously mentioned, the survival rate for businesses that Oxford Innovation works with is 95%. There are many reasons for this, but one of the most important is flexibility. We work with owners and managers to help them develop a flexible approach to business. All too often a business owner will not take time to look at their market and see if they need to adapt their business model and approach to fit in with what customers are demanding.
Manage your basics. Rigorously monitor and report on your day-to-day activity and, most importantly, your cash flow. Running a tight ship is so important. It's all too easy to get caught up in other elements of the business and forget the fundamentals.
Set clear milestones. The New Year is often seen as a time to reflect and consolidate but it can also be a good opportunity to plan ahead. With new start-ups it is good to set milestones for the year and get dates in the diary to make sure you can assess the progress towards those goals.
Seek independent advice. Get an honest appraisal of your ideas and be prepared to be challenged on your assumptions. It's important to be open to external views and suggestions. Often, in a small business, people can find it hard to see the wood from the trees. Independent advice and business support is not an easy ride, but it is hugely beneficial, but it is not an easy ride.
The year 2013 will continue to be a demanding economic environment for SMEs in the region. But we work with many high-growth businesses and start-ups that are experiencing great success. One common element between them all is their absolute passion for what they do. It may sound obvious, but it will keep you motivated and it will inspire people to buy.
For more information about Oxford Innovation and its Enterprise Coaching, with up to 30 days of fully funded business coaching, visit www.growcornwall.co.uk.