By Jess Goulart
Photo courtesy of Heisenberg Media.
It’s a dog eat dog world out there for young entrepreneurs. Research at The Harvard Business School estimates that 75 percent of all start-ups will fail. Okay, okay, only 30-40 percent fail entirely, but 95 percent fail to return on the original investment.
Despite those odds, more than 500,000 small business are founded each month in the United States alone, with high-tech firms experiencing a particularly robust birth rate over the last decade. Driven by brilliance, ego, or perhaps a little of both, everyone wants their own company these days, but how can you ensure your business doesn’t go up in flames?
Define your ethos
Laurence McCahill is the founder of The Happy Startup School, a company dedicated to helping start-ups succeed. He tells BTR that “usually people already have their idea or product, but sometimes they don’t think enough about the intangibles like vision and value. We try to get people to take a step back and think ‘why am I doing this? What’s the purpose, what’s driving it?’”
Get inspired at places like this online roundtable from One Million to One Million, question-based forums like Quora, or idea swapping sites like The Idea Swap. “The Do Conference in the UK gets inspirational speakers from around the world to share their stories, and I think for someone at the early stage those kind of influences are useful for encouragement,” adds McCahill.
Look before you leap
In an article on how to build a billion dollar business plan, Thomas Harrison, Chairman of Diversified Agency Service, told Forbes “I think some people get confused between a business plan and a marketing plan. A business plan…crystallizes why I’m in business; it shouts what I do for the world, for consumers, for my customers. It dissects my business DNA and how it is unique and clarifies why my customers should do business with me.”
For guidance, check out this comprehensive list of 50 free online business plan builders.
“Crowdfunding with IndieGoGo and Kickstarter is great,” McCahill says, “but with anything like that you’ll have to have a good story. They work particularly well for certain types of projects, like when there’s a community in place, but can be quite hard if there isn’t any audience behind them.” For co-founders and other financial avenues, check out foundrs.com, dreamstake.net, and Founder2be.com.
Track what works and what doesn’t
Sites like Quantcast, Clicky.com, and Google Analytics provide free traffic data, essential to identifying trends. The Young Entrepreneurial Council (YEC), an invite-only organization made up of the world’s most successful young entrepreneurs, warned of 12 other metrics not to be ignored, among them user engagement, growth, line of sight, and profit over revenue.
Avoid “premature scaling”
Or rather, the phenomenon that occurs when you focus on growing one area of your business and consequentially neglect all others. It’s the number one predictor of start-up failure. Venture investor Michael A. Jackson of Mangrove Capital Partners explained premature scaling to researchers at The Startup Genome Project as “like putting a rocket engine on the back of a car. Scaling comes down to making sure the machine is ready to handle the speed before hitting the accelerator.”
Don’t bother with the physical space until you have to, there’s a plethora of online office hosts
Small Business Trends named Basecamp as “one of the most dominant, prolific brands and collaboration tools in the Web-savvy world.” You can get a free two-month trial, but it seems this software is well worth the price. GoogleDocs is an obvious and free alternative, but Zoho and ThinkFree are top rated online suites as well, ThinkFree claiming the best integration with Microsoft Office.
Embrace social media
Follow these hashtags: #FastCompany, #StartupLab, #SMB, #smallbiz. Every Friday since 2009 Micah Baldwin announces people to follow, now known as the Follow Friday Trend with the hashtag #FF. Join in that conversation for some free visibility, and track Twitter trends with Hashtag.org so you can be sure to participate in other popular forums.
In an article on Huffington Post, Brett Farmiloe, of digital marketing company Markitors, suggested following your company’s name plus the most common misspelling of your company’s name, to help elucidate audience reception to your brand.
These resources may help stack the deck in your favor, but it will be up to you to keep playing even if you’re down. “Just remember, it’s all about doing something you’re passionate about,” says McCahill, “our message for startups is do what you believe in, with people you want to work for, for customers that you like.”