The current coalition government set aside £112 million to support the Start-Up Loans initiative. It was hoped the fund would enable budding young entrepreneurs to access start-up capital more easily, leading to growth in the number of start-ups quite literally starting up in our economy. The scheme also puts young entrepreneurs in touch with mentors to help them navigate all aspects of new business, from legal contracts to PR. Chaired by Dragon’s Den star, James Caan, the project recently announced its 1000th loan.
But why are start-ups so good for the UK financially?
Start-ups and small businesses are good for the economy because they fill niche spaces and encourage home-grown business growth. Start-ups are uniquely placed to offer highly tailored services and can grow and adapt much quicker than larger organisations.
But a great idea isn’t always a guaranteed success. Here are five of the most common reasons for start-up failure.
1. Giving up
You never hear about an entrepreneur who gave up but their business carried on without them and was a success. All entrepreneurs are hard working, focussed, ambitious innovators. They believe in their product and are willing to wade through an awful lot of a mud before swimming in the river of success.
2. Overdevelopment
The simplest ideas are often the most successful, at least at first. Just look at the likes of eBay or the Slanket. Focus on reaching the majority with a simple, trustworthy product or service before adding all the bells and whistles (Facebook is another great example of this!) There will be time for product development once you have a solid customer base.
3. Poor marketing
Reaching your market – it’s crucial. Aside from all the contract templates, logistics networks and market research, you MUST reach your majority target market quickly and easily. Tools like social media make it inexcusable not to have a marketing strategy in place before you launch your product. This brings us to the next point.
4. Lack of mentor
It can be too easy to think of more experienced people in and around your sector as simply competition. But mentorships can offer superb insight into things like industry trends and marketing strategies and perhaps offer advice and point out pitfalls you’d missed. Never cast aside advice from entrepreneurs who came before you; they’ve succeeded so they must have done something right!
5. Poor prioritisation
If an entrepreneur gets bogged down in something like what colour to paint the walls in their first office or what font to make their standard terms and conditions, it’s likely some other area of the business is suffering.
To have a shot at success, young entrepreneurs need to focus on casting a wide net and utilising all the tools at their disposal. Companies like ours make it easier than ever to access clear, trustworthy information, so stay on the lookout for similar businesses that could boost your chance of success.