When you establish a new business, you won’t want it to be just a flash in the pan, destined to close a few years later. Most entrepreneurs will start a venture intending to turn it into a company which grows over time, brings profit and offers a steady income.
However, every business faces obstacles, from the common to the unexpected. Your survival depends on you being able to navigate these barriers and show your resilience.
This guide explores nine ways to improve business longevity and boost your chances of survival.
Start with a strong vision and plan
Many small businesses fail early. Around 20% fail in their first year, rising to 60% after the first three years.
To survive the initial stages, you must start with a great value proposition that generates demand and warrants a place in the market.
Having a good idea alone isn’t enough. You need to turn your vision into a strong business plan with appropriate strategies to take your idea to market. It must include careful financial planning, good marketing and sales tactics that help you generate revenue and operational procedures that allow you to meet your output targets.
Creating a solid plan will give you the blueprint for long-term success.
Have the right skills
A successful company must have the right team to allow it to operate it at maximum efficiency. This team should be fulfilled by skilled professionals capable of the tasks required. You will also need a strong management team to lead your staff and push for optimal performance.
You will want to ensure your workforce has the values you need: resilience, problem-solving and striving for greatness.
Have recruitment and HR strategies that allow you to secure (and retain) the best talent for your business. It is also vital to devote time to upskilling your staff through training to develop as your company does.
Maintain cash flow
Positive cash flow is crucial to survival. It enables you to consistently meet your financial commitments, including supply and labour costs, enabling you to operate without disruption. It also allows you to fund growth and opportunities.
Many SMEs will undergo periods where cash flow is restricted. Rising costs, a decline in sales and unexpected expenses can all tighten it.
If cash flow issues present themselves, seek the root cause and find a resolution. Having good credit management processes will help.
By managing cash flow effectively, your finances will allow your business to operate efficiently.
Regularly monitor your financial health
Alongside managing cash flow, it’s wise to monitor your overall financial health regularly. Check factors like profit, turnover, revenue and expenditure to uncover patterns in your finances.
Reviewing your finances will allow you to highlight any red flags and resolve them before they create havoc in your business. This will enable you to avoid obstacles that could threaten your survival.
Understanding your accounts is also instrumental to making financially sound decisions that prolong the lifespan of your company.
Be ready to adapt
Markets are constantly changing, and your company must too. You must respond to your customer’s evolving behaviour and desires, alongside other external influences, to consistently meet demand.
To achieve this, your business must be prepared to adapt when required. It means introducing new processes and shifting priorities to act in the best interest of your customers or overcome a challenge. Doing so will improve your chances of success, no matter the context.
Monitoring data from your customers, operations and the broader market will prove crucial here, allowing you to uncover trends before you get left behind.
Grow steadily
Every business wants to grow. Growth is also key to resilience, enabling you to improve your position in the market, attract customers and drive revenue.
However, rushing growth often proves unsustainable and places pressure on your finances. It is better to grow at the opportune time with a considered strategy that accounts for the financial and operational implications. It’s also essential to ensure enough demand to warrant your growth.
By growing carefully and sensibly, you will secure lasting rewards.
Watch the competition
One of the most significant risks a business must face is a competitor stealing their sales. Competitors can disrupt the market or enhance their offerings to increase their market share.
While a bit of healthy competition is standard, it could seriously harm your survival if it goes too far. If you lose too many leads or sales, your revenue and profits will drop, which could spell disaster for your business.
That’s why it’s vital to keep an eye on your competitors and ensure you do not get overshadowed. Look at what they offer in terms of services and products and the strategies they use to generate demand and seek ways to add value to keep your customers on board. Ideally, you will also be able to attract sales away from your competition.
Keeping your prices competitive for your customers is key, as this is another potential reason for them to leave.
Don’t underestimate customer loyalty
A loyal customer base is crucial to survival as well as generating referrals and keeping sales levels high. Building strong relationships with your customers is of paramount importance to prevent them from leaving.
Improving loyalty will create opportunities to increase your customers’ spend, boosting revenue. Add into the mix that retaining customers is much more cost-effective than acquiring new ones, and the financial benefits are clear.
Provide a constantly outstanding service that meets your customers’ needs to keep them returning. By doing so, you will have a steady income even when the context changes.
It’s also worth seeking customer feedback (usually through surveys and reviews) to identify room for improvement.
Use external support when you need it
Many owners attempt to do it alone without any assistance. However, when an issue emerges, having support is the difference between overcoming it or letting it wreck your business.
When a problem surfaces, it’s best to be proactive and seek help immediately. Avoiding or trying to solve it internally could cause it to reach the point of no return.
Examples of external support could include lawyers, accountants and advisors who will guide you through various scenarios. It also includes external finance, which injects capital into your company and improves financial health for long-term resilience.
Utilising external finance will also assist your growth and allow the evolution you need to survive.
In summary
Having a business that stands the test of time will result in success. It will enable you to benefit from revenue and profit for years to come while giving your company a better chance of growing.
However, business longevity is no mean feat, with most SMEs failing in their first three years. You need to overcome numerous trials and tribulations, and you will only do so if you create ideal conditions. This means having a solid value proposition, managing your finances and continually evolving to optimise performance.
It’s also vital to utilise external support to guide you through challenging times. External finance serves various purposes that could boost your success, including improving cash flow, fuelling growth and filling emergency funding gaps.
At Pegasus, we identify the ideal funding solutions for every need. We can create a financial plan that supports you at every stage of your journey to extend the lifespan of your business.
Get in touch today to access options that strengthen your performance and improve longevity.