Business
The first 12 months of a new business – how a start-up business can survive the critical early months of trading
While success at business comes from having more cash come in than go out, startups usually need to spend the first few months in negative cash flow. In this period, each passing day can push the business deeper and deeper into a poor resource state. Among startup entrepreneurs, this state is known as the Valley of Death. It’s a state that only a few startups manage to make their way out of.
If you are planning to launch a startup, you need a real plan to get your venture past the Valley of Death in good shape. These pointers should help.
Go in prepared with the resources that you need to stay afloat
It takes a startup time to accumulate paying customers. You need to draw up a detailed plan for the kind of resources that you need to stay in business until sales begin to build up. Most startup owners simply self-fund their businesses.
Work hard to keep your costs under control
Spending as little as possible to keep your business going isn’t simply about making do with less. Rather, it’s about learning as much as possible about every aspect of your business so that you are able to recognize the best ways to save money. For instance, business energy contracts can be very complex to navigate. Shopping for a new energy contract is easier with a comparison tool such as http://www.ukpower.co.uk/business-electricity; but while price comparisons are a good first step, you also need to understand how to interpret business electricity contracts, too.
Use innovative funding methods
In the beginning, it may be a good idea to not devote yourself to your business full-time. Instead, you can consider keeping your day job on the side. The pay could help you stay afloat during the Valley of Death phase. A working spouse could help, too. Running a startup alongside holding down a day job can be a tremendous stress. It could take it longer to find its feet when you don’t give it all your time. Nevertheless, it can help to have a steady source of income.
Exploring crowdfunding is a good way to find easy startup funding. As long as you know how to talk up your business and attract the interest of strangers willing to bet small amounts of money on promising business ideas, you can succeed.
If you have large business customers who respect the work your company does, asking for a line of credit for orders yet to be delivered should be a good way to put funding together. You can also get funding from the distributor who supplies your inventory. Depending on how persuasive you are you may be able to talk a distributor into granting you a generous line of credit.
Looking on the bright side
As difficult as the first few months of running a startup can be today, it used to be far more difficult in the past. Today, with the Internet offering small businesses the opportunity to obtain funds through crowdsourcing, startups are easier to get off the ground than ever. The cost of doing business is smaller than it used to be, too. Whether it involves starting a new website or advertising on television, startups have access to better low-cost methods than eve a decade ago.
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