2020 was a bumper year for new start-ups. With lockdown making so many people look to form side-hustles, and persuading others to take the leap from side-hustle to full-time occupation, Companies House saw more than 835,000 new businesses registered over just 12 months.
Of these, however, only a minority will likely find their way to success in the long term. Based on businesses launched in 2014, the Office for National Statistics (ONS) puts the survival rate at more than 90% for the first year but just over 40% after five years.
So, what’s causing so many failures, and what steps might new businesses take to ensure that they’re appropriately resilient?
Cybersecurity breaches
While the high-profile breaches might grab more of the headlines, and more of our attention, it’s actually SMEs that are disproportionately targeted by online attackers.
If your business stores or depends on data, it’s essential you take appropriate precautions to protect your computer systems. This might mean investing in specialized cyber insurance that offers protection against this kind of risk.
Small teams
Having a small team with a lightweight wage bill can be an advantage in the early days, especially when everyone is pulling in the same direction and enthusiastic about a new project. But a small team can lead to a lack of certain skills in the workforce and a lack of flexibility when things go wrong.
You also might not have the budget for a dedicated HR department, which can lead to problems further down the line.
A lack of training
When your team is small, too much specialisation can be a bad thing. If you’re running a small pub, for example, every member of staff must be able and willing to pull pints, clear tables, wash glasses, and perform the dozens of tasks that the business requires. That way, any absences won’t be felt as keenly, as gaps in the available labour can be quickly filled. If this is made clear from the outset, no one will be able to say that a given task isn’t in their job description.
Insufficient marketing
If your would-be customers aren’t aware of your business and what it does, they’ll be unable to approach you and do business with you. It’s therefore vital to maintain visibility, both on social media and in the real world. If you don’t, you risk falling behind your rivals.
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