Posted: Wed 20th Jul 2022
Starting and running your own business is always challenging, but ultimately can prove very rewarding. I set up my business in 2011 and incorporated the company in 2015. We've been fortunate to grow our business year-on-year, now working with over 2,500 start-up or newly formed business clients.
Through this journey – and by working with a range of entrepreneurs and business owners over the years since starting out – there are a few things I've learned along the way that I’d like to share.
What are your chances of success?
Let's take a look at the statistics and the reasons most commonly cited for businesses closing. Although, in Ireland, we have a long tradition of entrepreneurialism – and strong support in place for it – 75% of start-ups face failure within a few years of launch.
Equally, around 15,000 businesses fail each year in Ireland, and companies have only a one-in-three chance of making it past 10 years. So, unfortunately, the odds are stacked against anyone who sets out on this journey.
A few of the reasons given by those businesses that fail include:
lack of financial management
lack of knowledge about the business
Despite these hurdles, Ireland saw a total of 25,695 new company start-ups in 2021, a 13% increase on pre-pandemic levels (2019), reaching the highest numbers on record in 2021.
To look at why they fail, we need to look at why they succeed.
Fitting into the market
When we were working out the finer details of our Accountant Online service, we spent time talking to new business owners and understanding what they wanted from their accountant, and how best we could work on delivering this for them.
We realised they were finding it tough to understand all the technical aspects of bookkeeping for their business, and built an online model so we could deliver webinars and content that demystified this for them.
Building it this way meant that those business owners could access information easily at any time. It was central to how we structured our business and built up our client base.
Knowing the market, and how your product will appeal to customers, is really the first step.
Researching and defining the market
Who are your customers? Where are they? Who are your competitors and what do they offer? What can you do differently – and better – to reach them whether it's online or in person? There's a lot you can learn through surveys, focus groups and questionnaires.
Setting the right price
How do you structure your pricing and what is the best price point for your product or service? What do your competitors charge?
There's a temptation at the beginning to offer discounts or lower pricing to attract customers. But, actually, it's about the long-term game and making sure you can keep going at these rates. Work out what will allow you to keep customers but also stay profitable.
Quality and customer feedback
Although a product or service may have originally presented itself as an excellent idea, and market research backed this up, sometimes the quality can let it down. Choice and expectations mean that customers will move elsewhere if they don't get what they want or expect.
We regularly use Net Promoter Score to gauge customer sentiment – it's very simple and it's free. It helps us to measure customer experience and predict our business's growth. It's worth including something like this in the customer buying experience so you can continually get feedback and improve.
What are you hoping to get from owning your own business?
This is a key question. We've worked with clients who are happy to run a service business themselves – where work-life balance is a key consideration – or to focus on a particular consultancy niche. In these cases, the focus is more on pipeline and making a worthwhile salary.
Other start-ups concentrate on preparing the business for export and growing their presence in both domestic and international markets. Achieving this means putting in more time and investment.
You may need to seek external investment in the form of angel, venture capital (VC) or Enterprise Ireland (EI) funding. There are various options available to you and each will have their own requirements.
For example, if you apply for EI funding, it may be high-potential start-up (HPSU) funding, in which case there are three key criteria to meet:
Selling a new or innovative product or service to international markets
Being involved in manufacturing or internationally traded services
Creating 10 jobs in Ireland and realising €1 million in sales within three years of starting up.
So, ask yourself: what are you hoping to achieve? What agencies or organisations can help you to achieve this? Once you've decided on your key goals, this will determine how you fund, run and grow your business.
Do you have the right people around you?
You have the idea – and the vision – for your business. And that will certainly get you so far. But there comes a time when you must step back and assess what skills you'll need to take the business to the next level.
In 2017, online visits to Accountant Online were at just 700 per month. Now we're hitting over 25,000 visits to the site every month and continuing to grow this number.
Partnering with a digital expert helped me to accelerate this aspect of the business – something I wouldn't have achieved without hiring the right expertise. It's about knowing your skills and what you need to get help with so you can bring in the appropriate team members.
How will you fund the business?
The first thing to think about is the type of funding. Where are you going to generate funds for the business?
Are you ready from a financial perspective? One of the main challenges business owners face is financial stability. Most small firms close within a year due to a lack of financial management and using funds inappropriately during the initial phase. Around 21% of start-ups fail because they've misused investment.
We've found that 68% of our clients started their businesses using their own savings. However, for the others, it will involve pitching their business idea to secure funds, which means pulling together a strong business plan.
Serial entrepreneur and start-up expert Bill Gross describes the business plan as a "clear path to generating revenue". A lot of start-ups can struggle to translate their ideas onto paper into a clear strategy. But taking the time to work through this document will really help at the funding stage.
There's a lot of supports available – either through traditional banks or via government agencies and accelerator programmes. In Ireland, there are four main sources of finance:
Grants from government agencies
Take time to consider the type of funding that will work for your business and to develop a business plan to outline how you'll run your venture.
Know your numbers
I'm an accountant so I'm obviously very comfortable with the financial side of the business. As a business owner, you don't need to know as much as that, but you must understand the key figures. There's a reason why the start-ups on Dragons' Den are grilled on their financial projections!
Investors want to be sure that the financials are solid. So, the main things to consider include the following:
What's the predicted return?
What are the margins?
Is the company profitable?
Where do you sit among your competitors?
Can you sustain the pricing?
Is there a market to grow or scale the business?
Brand awareness, sales and marketing
All start-ups face the challenge of building their brand name and driving sales and web traffic. If no-one knows about your business, how do you generate sales and how do you grow?
At the very minimum, start-ups must have an online presence. Consumers are online and expect their chosen brands to be there also. Digital marketing will help to raise awareness and cut through all the online noise.
How far you need to go with your digital and social media activity will depend on what type of business you have and where your customers are.
There is a range of resources available to help companies to develop a marketing framework and create digital marketing plans and social media business profiles.
Enterprise Nation Ireland has teamed up with a range of finance partners to show you which funding options are available and help you gain access to them.
Take part in interactive workshops, e-learning modules and free in-person consultations to move your business to the next level.