Starting your own business can be empowering, exciting and put you firmly in control of your ambitions.
Unfortunately, no small business operates without risk and startling new research by commercial insurers RSA has revealed that more than 50% of small businesses fail to make it to the five-year mark.
The research, published on Insider Media, that 63% of small business owners described growth as ‘difficult’ and 69% reported growing a small group into a medium-sized enterprise to be a challenge. The businesses survey named bank lending, tax breaks and business rates among the top five barriers to a three-year continued growth rate.
SME trading director at RSA, David Swigciski, said:
“The UK is a great place to start a business, but our research reveals that survival rates are low.
“The recession has had an unsteadying effect on SMEs and we need to work hard to rebuild their confidence.”
Don’t Become a Statistic
We reached the five-year mark ourselves recently and we can testify to just how much work it take to reach this important milestone.
If you’re still in the early stages, don’t let this research give you the fear about your future. Robust early planning and ongoing vigilance will help you make the best decisions for both you and your business.
We’ve got a couple of practical methods that should help.
- Business Exit Planning
It may sound counter-productive at the early stages but having a sound exit strategy in place gives you visibility of what’s coming up next and of the future.
This plan can also help you identify any potential problems before they become reality, with time to make improvements.
(We’ve got a free checklist to help you build your own business exit plan. Download it here).
- Building Value from Day One
Another plan you should have in place from day one is a plan to build the value of your business. Having a sellable, attractive business for potential buyers gives you increased security and means you are more likely to get the price you want when the time comes to sell.
Regularly assess and adjust the value of your business to make and then implement changes. This should keep you alert to any red flags.
- Take Time Out
Give yourself permission to take some time out from your business. This can be really challenging, particularly in the early years, but giving yourself this breathing space will help you identify where potential problems are brewing and give you the thinking time you need to find the right solution.
You should also consider getting support from your peers in business. All too often, running a business can be a tough and lonely job, so don’t struggle alone. Find support and strength in sharing your experiences with like-minded entrepreneurs.
Never be afraid of getting professional financial planning advice. It’s not a luxury – it could be the difference between success and failure.
A good financial planner will not only help you develop a tailored financial roadmap, but can also help you grow your business, identifying key initiatives, milestones and deliverables that will drive your business.
Although sobering, this research shouldn’t dampen your enthusiasm from running your own business. We’ve helped many clients build their business value, not to mention their personal worth. It’s hard work but careful financial planning can help you reap the rewards for the rest of your life.