Tips for starting a business in the modern world
If you are thinking of starting your own small business, you are far from alone.
In 2015, the Australian Bureau of Statistics reported that the entry rate for small businesses increased from 11.2 per cent in 2012-13 to 13.7 per cent in 2013-14.
Yet, launching your startup can be an isolating experience. You have a big idea burning bright and if it succeeds, the world is your oyster. If it fails, you are on your own.
This is how you can learn from the lessons and experience of startups that have already blazed the trail.
How have things changed in the last decade?
The digital landscape has become a very different place.
We have seen the advent of social media, YouTube, smartphones, cloud computing, and more.
This new digital era allows for new methods of distribution and the ability to streamline many aspects of the day-to-day running of a business, such as account keeping and stocktake.
Data analytics may be one of the most significant developments over the last decade, with more information about customers and their shopping habits available than ever before.
The importance of data analytics was reflected in a government report, released last July, which emphasised the importance of data and data analytics for innovation and economic growth. It’s important for individual businesses too - a 2012 white paper, sponsored by software company Baynote, found that 93% of retailers consider analytics to be the most important customer retention tool.
The challenge for small businesses, however, is utilising this data effectively and efficiently - the sheer amount of data available to businesses of any size means this isn’t a straightforward task. While web analytics tools (like Google Analytics) can offer accessible marketing insights based on who visits a business’s website, this is just the tip of the iceberg.
Incentives open new doors
The political landscape, too, has become friendlier, particularly for small business. A prominent indication of this are the tax breaks for startups legislated by the Federal Government to encourage innovation.
This bill includes concessional tax treatment for investors, a 20 per cent tax offset on investments in qualifying companies (capped at $200,000) and a conditional 10 year exemption on capital gains tax.
The pitfalls to avoid
Finally, there are a few things you'll want to avoid if you want your start-up to be a success. Market research firm CB Insights sifted through the ashes of 135 failed startups, and identified the following key reasons for failure:
- Arrogance (85%). Overconfidence can lead to mis-reading the market, mistiming your launch or jumping in without a business model.
- Shortsightedness (55%). Running out of cash or investor interest.
- Hubris (47%). The best ideas won't get off the ground without proper marketing and customer focus.
- Egotism (36%). There is no I in team, but there is one in primadonna.
- Sloppiness (34%). In a crowded marketplace, you have to be meticulous.
- Imbalance (30%). Burning the midnight oil can lead to burnout and loss of focus.
- Inflexibility (17%). Don't follow your path to the bitter end, bend and shift to match changes.