Did you know that a whopping 20% of businesses fail within the first six months of trading?

A shocking statistic that is probably not what you want to hear when you are starting out on your own, but something you need to know, nonetheless.

So, why do so many new businesses fail, and what can you do to make sure you survive your first six months? Let’s take a closer look.

Why do businesses fail in the first six months?

There are lots of reasons why new businesses fail in the first six months, including:

• A lack of funding or capital
• Poor management
• Ineffective business planning
• Insufficient market demand
• A lack of planning
• A failure to adapt

How to survive as a business in the first six months

Do market research

Before you even think about launching your new business, you first need to take the time to carry out market research. This will help you to determine if there is a demand for the products or services you intend to offer.

Make sure you not only find out if there is interest in your product or service but also if people are willing to spend money on it. During this stage, it can also be a good idea to take a closer look at your competitors to see what they are offering, how much they are charging, and how they are marketing their products or services.

Keep employee costs low

A common mistake that new business owners make is to spend too much of their precious budget on hiring new employees. When it comes to hiring, there are two things you need to do: firstly, hire the minimum number of employees in the early days and, secondly, pay them with a combination of money and equity.

If you have family and friends who are willing to help you in the early days, take advantage of this support, especially if someone has a certain skill set, such as bookkeeping or website design.

Don’t spend too much on marketing

Of course, as a new business venture, you need to market your business, otherwise no one will find out about your products or services. That being said, you do not need to spend a fortune to get people talking about your brand.

Look to low-cost digital marketing techniques such as social media marketing, content marketing, and email marketing, all of which you can carry out yourself with a little bit of effort and not much capital. Avoid high-cost marketing techniques such as pay-per-click advertising and TV advertising, as these will drain your budget dry in a matter of weeks.

Think outside the box for funding

Even if you have already secured enough funding to get your business going, you never know when you might need a little bit more cash to see you through the first six months. Rather than go back to your bank and ask to extend your business loan, it can be a good idea to think outside the box.

For example, crowdfunding offers a great way to raise extra money for your business and works by finding like-minded people who are willing to support and invest in your business. Alternatively, you could ask family and friends if they would like to invest in your business in return for a percentage of the profits.

Embrace automation tools

Although you may be tempted to try and do everything yourself to save money and resources, this is not always the best course of action. Not only is this more likely to result in human error, but it can also harm your mental health.

Fortunately, there is now a wide range of automation tools and software programs available that can help you carry out the vast majority of business tasks with minimal effort and maximum results.

Some of the most popular automation tools include accounting software such as netsuite accounting services, time-tracking software, project management software, and customer relationship management (CRM) software. If you are worried about the initial cost of these tools, there are some programs that you can try for free to see if they are worth the investment for your business.

Build your network

Do not underestimate the importance of building a strong network when you first start as an entrepreneur. Remember the popular saying, “It’s not what you know, but who you know!”? Well, this couldn’t be more true for new business owners.

There are lots of ways you can network effectively, but ultimately, it comes down to getting yourself out there, meeting new people, and telling them about your new business. If you are new to networking and are feeling nervous about it, there are lots of networking tips for beginners that you can try. Also, you can start with online industry events and then, as you gain confidence, work your way up to face-to-face meetings.

Don’t forget to look after yourself

Burnout is very real and is particularly prevalent in new business owners who pour their heart and soul into their new venture at the detriment of their health and well-being. A combination of long hours and constant stress can leave you feeling a shell of your former self, and this is not good for either you or your business.

To prevent burnout, especially during the first six months of launching your new business, make sure you take time to look after yourself at the end of each day. This could be by going for a walk in a local park, meeting up with friends for dinner, or simply relaxing in the bath.

Takeaway

There is no denying that launching a new business in the current climate is a risk, but that doesn’t mean that you shouldn’t do it. What it does mean is that you need to be as prepared as possible before you open your doors to the general public.

Do your research, take the time to plan, put contingency plans in place, and, most importantly of all, make sure you have sufficient funds to weather the storms.