If you are in business a lot is riding on your back. Certainly, you can’t afford to slump. Throwing the employees who rely on pay cheques out of work would hurt a lot of households down the chain. That is not what you signed up for when you began your entrepreneurial journey. For whatever it is worth, you have got to work your socks off to ensure you keep your business running.
Let’s get down to a little market data. According to Louisa Zhou, a business coach, nearly 20% of businesses do not survive beyond the first 12 months. Business Insider research revealed that 82% of failed businesses fail because of cash flow issues. Another research report attributed 32% of business failure to a slump in market demand. It is also reported that about 20% are pushed out by tough market competition annually.
Africa has the highest entrepreneur rate. Yet, according to a report 80% of businesses on the continent don’t survive the first year. Close to home, Business Day, a Nigerian publication, put Nigeria’s business failure rate within the first year at the same alarming percentage recorded across the continent. Two of the factors accounting for the poor business survival rate in Africa are a lack of entrepreneurial skills and low funding.
Globally, Greece has one of the most impressive business survival rates, reportedly at 97% within the first year. The United Kingdom has an 88% survival rate. In the United States, about 13% of businesses fail within the first year. Canada shares a similar survival rate. In South Korea, 65% of businesses survive the first year. Other regions within or slightly outside the same survival spectrum.
The statistics about the worst-performing markets above didn’t present the full picture of what happens across industries though. There are about 333 million companies around the world, yet over 64% of first-year market entrants survive the onslaught of an unfair first year in business. This provides a reason to believe – or hope – that your business can make it past the grim operating projections.
It is about knowing how to ride the bumpy market routes that manifest in the forms of tough sectorial competition, cashflow glitches and headwinds. It is also about understanding the peculiarity of markets. Besides what has been mentioned, here are three keys to surviving the first year in business:
Build a support system of experts – No one has a 360-degree perfect knowledge of every field. What you don’t know can place a limit on your capacity to survive challenges that creep up in fields that are quite different from what you are used to. In such circumstances, you would have to rely on the Specialised skills or talents of other people. Most businesses fail because the founder tries to be a know-all and a do-all. It hardly works.
Arm yourself to tackle challenges – To be realistic, market realities don’t always succumb to accurate pre-entry predictions. Unique and unforeseen human, environmental, system and political changes can spring a surprise along the curve leading to panics. Without access to the ready tools and resources necessary for addressing these challenges, losses can occur.
Avoid rigidity – You must learn to stay flexible and adaptable. You are going to encounter trends and innovation along the way. It is a serious part of the 21st-century competitive landscape. You must expect them. Trends and innovation are levers of change. Meanwhile, they create hurdles for less rigid businesses that are not able to adapt quickly.
Becoming an entrepreneur is one of the most fulfilling engagements you can ever think of. You should give it your best.