By Mohammed Ibrahim, Entrepreneur and Founder of The Clinic Room
The market upheaval caused by the pandemic spurred many Brits on to launch their own business, with 800,000 registered in the first year of the Covid-19 outbreak alone.
However, whilst Britain is a hub for entrepreneurship, around 9 in 10 start-ups end up failing. Now, with the cost-of-living crisis escalating and amid a backdrop of supply chain issues and soaring inflation, SMEs are facing an even harsher reality.
According to Lloyds Banking Group, business confidence has already dropped to just 33 per cent this year – the biggest fall since the first 2 months of the pandemic. With the Office for National Statistics (ONS) also finding that 24 per cent of businesses saw a drop in their turnover in June compared to the previous month, it is easy to see why so many SMEs are struggling to map a path to success.
Without a doubt, the first year is truly the most difficult for any business venture. So, how can SMEs survive and thrive amid the ongoing market turmoil to come out on top?
Prioritise strong foundations
Entrepreneurs cannot afford to overlook the importance of building their business on strong foundations. As a starting point, researching the industry, consumer appetite and competitor activity is crucial.
Developing clear business and marketing plans will also go a long way to setting an SME up for success. Whilst you might start off as a solo operation, when it comes to attracting capital to back growth, any bank or investor will want to see your vision for the business. So, spend time making sure you get this right from the off – it will not only highlight what makes your business a good investment, but also what makes it unique.
Learn to say ‘no’
In order to set your business up for success in the first year, you need to learn to say ‘no’ to all your other great ideas. Pursuing a variety of different product lines or services too quickly only leads to distraction and loss of focus. Entrepreneurs have an extremely bad habit of trying to expand too quickly, and into diverse markets, which almost always causes a fracture in their primary business or product line – ultimately leading to a decline in sales and an overall downtrend in business growth.
Saying ‘no’ and putting these ideas aside for the time being is the best thing you can do to help you and your business thrive in the first 12-months.
Act at pace
The single biggest mistake business leaders make in their first year is focusing too much on perfecting their offering and not focusing on driving forward delivery with the product and/or service they already have.
The mind of an entrepreneur is hard-wired to overthink every detail and continually work on improving their perception among potential clients. However, often they forget to take stock of what is right in front of them. If you have a minimum viable product (MVP) ready to go, then what is stopping you. This is usually enough to attract a first wave of clients, so start selling. Not only will this get you off the ground, but, most importantly, this then allows you test the market in real time.
The key point is to bring your business to the market as fast as you can, so you can get you the information you need to make the best decision for the business to move forward.
Profits are not the be all and end all
It may seem like a contradiction, but SMEs need to forget about profit entirely, in order to survive the first year in business. Instead focus on directing any disposable revenue into the correct marketing channels and establishing cash flow.
If 80 per cent of your business is coming from ‘marketing channel one’, SMEs will need to double down on that one area. This will vary from industry to industry, but as an example, if you spend $1 on TikTok adverts and it is consistently giving you $2 back, you need to understand that you now have a sales printing machine!
Taking advantage of this whilst you can is paramount as this channel and flow of sales will not last forever. Our growth at The Clinic Room doubled month on month from the very beginning by applying this very same principal.
Going out alone and setting up a business is no easy feat. The first year has always been the make and break for SMEs, however, amid an extremely challenging economic landscape, the steps entrepreneurs take now to stay afloat and on track with growth projection pathways is more important than ever.
While three-quarters of SMEs now see the cost-of-living crisis as the biggest threat to their survival, the long in the short is that they are essential to the economic revival of the nation. Therefore, it is important that we inject a wave of optimism into the sector and support as many entrepreneurs and business leaders not only to survive, but also to thrive, in their first year of business.
Mohammed Ibrahim is an Entrepreneur and the Founder and CEO of The Clinic Room – the World’s First SMART Cosmetic Clinic. With a background in tech start-ups, Ibrahim has spearheaded the company to £1m turnover in the first year and now has three new site locations under development.