Against the backdrop that around 30% of businesses fail in the first two years and 50% in the first 5 years, it shows that many businesses fail, as the idea is not sound, or the owner simply runs out of cash as their pockets are just not deep enough.
So, what happens in the first couple of years? After the formalities of bringing the business into existence the owner will be seeking as many sales as possible. They will be seeking as much cash as they can from sales., for their own survival and to recover their initial investment for establishing the business. They will be finding their feet as to what the market will bear in terms of cost and what demand the market has for their product or service.
During the first two years, there will be sleepless nights as the founder asks themselves. “when is my next sale going to occur?”. By listening to their customers, and those that don’t buy from them, the founder should modify their offer so that it becomes attractive compared to what exists in the market. Very quickly, those businesses which are going to be successful will be able to describe what makes them different and have a convincing reason for people to buy from them. Their market research is based upon reality. They can prove there is a market and the business can work.
Sales are not only dependent upon a product or service being differentiated. The price, or fee, must be pitched at a level the market will bear. For established businesses the costs are relatively constant, but for a start-up, there are the additional costs of starting up. By trying to recover the start up costs in the price, either the price will have to be set too high and sales plummet or there is no profit made which can be used to fund growth. A loan to spread the start up costs could be the answer.
The government has a loan scheme for start-up’s to fund purely the start up costs. The loans are a very low rate, so the repayments can be accommodated in your pricing, without making you uncompetitive. As mentioned above, a start up is seeking to gain more sales, so marketing is a key element in the first couple of years, getting a logo, setting up a web site, obtaining signage and printed materials such as business cards are all essential. If you can prove that there is a market for your business idea, and are ready to start marketing in earnest, then a start up loan could be for you.
If you would like to apply for a start-up loan to spread those initial one off costs, then please go to: https://transmitstartups.co.uk/referrals