Whilst the start-up rate for small businesses in the UK is at a record high, only four out of ten businesses survive after five years of trading. After nearly a decade in business and over 170 clients, we’ve seen what differentiates a start-up success story from a a failure. Nilden had the pleasure of speaking to the Thrive Magazine team in their latest issue on the topic of start-up success, and how new small businesses can better their odds.
The full interview is featured below, as well as in the Thrive 2018 Winter Issue.
From your experience as an accountant supporting small businesses, what have you found are the main reasons for the low survival rate of start-ups?
When you run your own business, you have to take on a variety of roles – all at the same time. As soon as you start up, you suddenly become the product designer or service provider, the seller, the marketer, the bookkeeper, the business strategist, and the visionary leader of the company. The amount of work involved in fulfilling all these roles can feel overwhelming. Before business owners set out on their entrepreneurial journey, they don’t realise just how much work is involved. I have seen lots of entrepreneurs burn out, unfortunately, due to the amount of the work they have had to undertake. They try to do everything themselves, and then suffer as a consequence – both mentally and physically. Even if they are passionate about what they do, that passion will only get them so far.
I have also seen businesses expand too quickly. They gain two or three clients who comfortably finance their business. As things seem to be going well, the entrepreneurs decide to move into bigger offices, and invest in more staffing and resources. Then, out of the blue, one of their clients suddenly leaves them, and they are left with significant overheads which they can’t afford to pay.
What can start-ups do from the outset to boost their chances of survival?
I recommend that entrepreneurs stick to what they are good at, and delegate the work which they are unable to do, or don’t have time to do. As soon as they can afford to, they should consider outsourcing some of their tasks. For example, they could appoint a virtual assistant to take on some of their administrative work, a freelancer to manage their social media marketing, and an accountant to assist with their financial responsibilities and bookkeeping.
I also suggest that entrepreneurs network, network, network! Entrepreneurs need to raise their profile in the marketplace as quickly as possible, to establish who they are and how they differentiate themselves from their competitors. Once an entrepreneur has started growing their professional network, they can then use that network to collaborate with others and build the foundations for long-term partnerships. All of this will then help build their reputation and, in turn, boost word-of-mouth recommendations. An entrepreneur’s professional network can also be an essential resource for them to vent their frustrations, seek advice, and overcome any business challenges they face.
Do your clients share any common characteristics or mindsets which you feel have contributed to their business success?
I believe there is no such thing as the ‘perfect entrepreneur’, but I have noticed some common traits among my clients who own thriving businesses. Those clients tend to be confident in who they are and passionate about what they do. They are extremely focused, and know exactly what they want to achieve and how they are going to get there.
I also think that they are very people-oriented. They are very approachable, personable and emotionally intelligent. They genuinely seem to like meeting other people and making new connections.
These business owners also seem to have a growth mindset. They are committed to learning new things and improving their personal and professional skills. They constantly seek feedback and are good at listening about how they can make things better. Rather than feeling deterred by the feedback they receive, they are inspired to learn from that feedback and grow – both as people and as businesses.
How do you support your clients to plan their business growth?
Business owners need to have high-performing people in their teams. As an accountant, I consider myself to be part of my clients’ team, and therefore invest time and energy to develop a strong working relationship with all of them. It is only once I get to know my clients and their businesses really well that I am able to offer timely advice, and then to make sure that the cash flow is in place.
On a practical level, I support our clients to have the right processes, software and reporting procedures in place, so that they can spend less time on the financial side of things, and more time on running and developing their businesses.
I also make sure that I find out early on what our clients’ business goals are and what they want to achieve. Listening to our clients and their ideas is a vitally important part of the process for me and my team, so that we can then work out how to help them realise those ideas. This can only happen when we get to know our clients really well, rather than just playing an administrative role crunching numbers and organising their paperwork.
What should every start-up ask an accountant before they appoint one?
As in any relationship, you need to find out if you are the right fit for each other. I recommend that you find out what kind of hands-on support the accountant can offer you, how they will do your accounts, what online software they require you to use, and how much they are going to charge you for their services (and whether that is on a monthly or annual basis).
As a start-up, you should also find out what experience the accountant has of working with early-stage ventures, and which industries those start-ups come from. If you are beyond the initial start-up phase, and are looking for investment, you should also find out how the accountant will help you prepare for private equity investment.
Finally, what kind of clients do you enjoy working with?
We embrace diversity in the workplace, and relish an equally diverse client base. We work with start-ups as well as with more established businesses who have survived the start-up phase and are now in a period of growth. In particular, we support creative and technology-based businesses.
However, we also reach out beyond these industries to work with people who enjoy pushing the boundaries and exploring new ways of doing things. Our clients include freelancers, startups, retailers, tech firms, Brighton Digital Festival, UX Brighton, and codebar, among others. The common trait running through all our clients is their creative approach, their innovative behaviour and a desire to challenge the status quo.
For support in starting and running your start-up, why not book in for a free consultation with us?