In a study presented by The Telegraph, it stated that an entrepreneur needs at least £22,000 in order to start a business. That amount of money goes into account incorporation, legal costs, HR overheads, and accountant fees. This figure does not include fees spent on business related trips, as well as the purchasing of equipment for the office.
In fact, not a lot of businesses survive their first year of operations. Tech Round revealed that about 50% of start-ups fail in the UK, and this is because of several things that could have been prevented if the owner/s had prepared properly before launching their business.
If you’re a fledgling business owner and would like to keep your operations running, here are three variables that you will need to keep an eye on in order so that you don’t become another failed businesses statistic.
Develop a data-based culture
Data is the lifeblood of your operations. While businesses require some “gut feeling,” it’s always better to rely on data as much as possible. Import.io suggests that transactional data is extremely important because it helps business owners expose variability and optimise their operations. The patterns found in transactional data can give businesses the competitive edge needed by owners to increase profit margins.
Before launching a new product it is vital to do market research. Tracking key performance indicators or KPIs, as well as understanding when they’ll go up or down, you will be able to keep your business on the right track.
Understanding the margins of your products and services
When you’re in business you need to take into consideration all of your expenses and decide a reasonable margin for your products. Another important consideration is to check any changes to the tariff and trade laws in countries that you operate in. For example, in the UK, taxes may soon rise when making transactions with merchants who operate within the Eurozone due to Brexit. An article published by FXCM details some of the future issues that may happen to UK-based businesses in the near future. One of the potential issues could be that all British goods may have to undergo customs procedures for entry into the EU. Should that happen you would need to adjust your margins because of the customs fee. It is best to keep your customers fully aware of any potential changes to your services and prices.
Customer loyalty and retention
If data is the lifeblood of a company’s operations, customers are what keep the business ticking over. Without returning customers, a business cannot succeed. You need to build customer loyalty through good customer service.
There are 3 methods for measuring customer retention and loyalty: customer surveys, immediate feedback after making a purchase, and purchase analysis. According to Fred Reichheld, a New York Times best-selling author of several business books, a 5% improvement in the retention of customers can augment the revenues of businesses between 20% – 95%.
Remember to keep these three points in mind when doing business on a daily basis. Watch out for changing trends so that you can adapt your business accordingly.