How many times have you heard someone say X amount of start-ups fail within the first year, and X amount more fail within the first 2?
Well, I’d heard it a number of times, this was before I even had any plans to be part of a start-up or to grow a business. It’s amazing how much more your hear it and how much scarier it is to hear when you’re about to quit a stable well paid job to become a first time entrepreneur.
Then the research starts, is this actually true?
Turns out it is very true, statistics show that 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. But why? And if the reasons behind the failure are so commonly known why do they continue to so negatively affect new businesses to the point of failure?
There are a couple of reasons that cropped up across each article and blog I read at the time, these were:
- Lack of communication with customers/clients.
- Breakdown in leadership
- Not really offering anything new or unique
- Inability to portray benefits and values
- Failure to establish a profitable business model
All very bad things to experience when you’re creating a business and I agreed with each, I still do. But these weren’t situations that we addressed as reasons we might fail. We communicate with our clients out of a desire to improve and better our service.
Mike and I set out from the start to do things in the right way, we both had a clear and shared vision of where we wanted to end up. Knowing we were both pulling in the same direction even if sometimes we didn’t 100% agree on small parts of how we got there made a breakdown in leadership almost impossible.
As far as offering a unique product or service and being able to portray/sell this, we’re in the business of business development so we had a unfair head start I suppose. Though trying to win work from our first couple of meetings was a daunting prospect. No stories, no comparisons no trading history to back up our claims, just myself and Mike selling ourselves for the first couple of meetings . And without sounding glib, a failure to establish a profitable business model is a reason to not start a business, not a reason you should fail once you have.
This isn’t to say we have skated by for 2 years and arrived at one of our first serious milestones without challenges. Like I said, the above weren’t reasons we thought we would fail but we still had to work through each of them. For us I would say that our first real test was inconsistent payments, this was something we thought may happen and worked on bettering with our clients. It wasn’t too bad whilst it was just Mike and I. It contributed to a couple of months in which neither of us could take a wage, though this was expected and managed. When we had the opportunity to grow however, having the money required to do so on outstanding on invoices well passed their payment date gave us some tough choices. Choices that could have lead us to the edge of a very steep, very slippery slope.
Once we had committed to growing it became a balancing act of building the right team, bringing in new clients and retaining all of our current clients. This was the next challenge, how and when to push on each area. We had only been trading for 5 months at the time we started growing, not nearly enough time to look back and have any sort of usable data we could analyse to help make these decisions. We had a number of options and could have gone really in any direction, though we stuck to our guns and focused on people. We decided that our driving purpose would be to build the best team we could, that we would never say no to the right person. It lead to some amazing interview moments, we could barely get halfway through an interview with someone we knew would be a great fit before one of us would uncontrollably yell professionally ask “Would you like a job?”. Which was fortunately always met with a smile and a “yes”.
There were thousands of decisions to be made during our first 2 years, some of them small, some of them that would help shape our Business. I would say that over all that this decision making has been the area which has been the reason we could have potentially been in difficult situations or came close to being just another statistic of why new companies fail. Sometimes we got lucky, sometimes we made tough decisions that pushed us forward.
It’s funny to look back at decisions that could have gone in such different directions and everything we have learned over 2 years to help us as we look to progress and grow further.
So, what have we learned? How have we changed?
Well for starters we didn’t just survive 2 years, we grew and established ourselves within the Construction specific Lead Generation arena and we now have 2 years’ experience in running and growing a business, 2 years of information we can use to help keep us heading in the right direction. We’re no longer bringing clients onboard with a promise of success, we have 2 years of proof that what we do works, and how we do it isn’t just unique, it’s better!
When we started we may have won some work down to price, might have just been lucky or may have just been likeable (we hope). Now we have clients coming to us, now we win work because our business model is proven and being a value driven company actually means something.
We still never say no to the right person when it comes to building our team, but we’re offering a fair and fun place to work with opportunities to progress as our company grows. We have a training scheme in place that means we can place more value in a cultural fit.
All in all 2 years is still a very short space of time and each time we reach a goal we have set we’re under no illusion that it only gets harder. Still, we’re extremely proud of how far we have come and are looking forward to the next 2 years!