Michael Gibbs

In a number of cases, many new businesses fail shortly after conception. But why is this? Well, I think it can be put down to three pointers, all relating to research:

1. You have not understood who your customers are, and what they are prepared to pay for.
2. Not enough of them know about you fast enough.
3. You don’t have the resources to do the first two properly.

Before launching a new business, do your homework! Find out what your particular market place looks like. Think of your marketplace as a jigsaw picture, and you are trying to find little pieces of information that allow you to paint that picture. For example, who are you going to compete with, what are they good at, what they not so good at, what level of prices do they offer, what do customers think of them?

As you paint the picture of your marketplace you will gain a better understanding of how you are going to compete. Remember, before you start 100% of your customers are currently in the hands of a competitor or they don’t use your product or service at all. Your job is to work out how you can attract them to your business.

It can take two to three years to build a sustainable customer base, so make sure your marketing is as effective and thorough as you can afford. Use all the tools available through social media and target your material at your market. Your homework will have helped you describe your ideal customer; if you can describe them then you can work out where to put your marketing material to best effect.

There are many opportunities to acquire marketing skills, many of them provided free of charge, and will help you understand where your resources are best used and how to spread the word about the benefits of doing business with you, rather than one of your competitors.

A basic cash flow forecast will help you identify where your business is going to need support, either from your own pocket or from another source of finance. Forecasting is seen by many as educated guess work, but with some effort you will find evidence to support the numbers you calculate. This is hard work, there is no short cut, you need to talk to potential clients and find out what it is that will make them buy from you.

Ideally you want orders in the book to justify starting, but in the absence of real orders you need a significant number of clients to tell you that if you supply that product at that price they will buy it. If you haven’t got that evidence you will need to be very lucky to survive at best, and at worst your bank balance will look pretty poor!

Understand your customers, find out how to talk to them, learn what they want to buy, supply it in a timely and cost effective form, and repeat again and again and again. Make sure you have sufficient resources to do the job properly. If you don’t know how to do some of these things, seek help and advice, there is plenty available.

Editor’s note: Michael Gibbs is a Business Adviser. You can contact him via email at [email protected].

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The UK economy is facing tough times, and the need for economic recovery has never been more important. Increasing numbers of people are being made redundant in the public sector. Large companies are trimming their workforce to remain competitive, therefore what will drive our recovery?

The East Midlands is predominately made up of small and medium-sized enterprises (SMEs) and adding to this core business community is a very effective way to create wealth and jobs for local people. 75% of all new jobs are created by businesses employing fewer than 10 people; these are the real job creators.

How can this growth in new start-ups be encouraged? The private sector does not cater for new start-ups, as the cost of buying professional help is too high for a fledgling business. New business owners do not know what they don’t know and need unbiased guidance to navigate through the early months of a business launch.

They require an independent, impartial support service to encourage and facilitate their success. Banks and accountants can provide support, but these will have a vested interest in the commercial offering and someone has to pay. An independent adviser can provide face-to-face support to consolidate knowledge gained from other sources such as the internet or telephone.

It is well documented that businesses who take advantage of support available have better survival rates, better growth and more job opportunities than those who don’t.

Encouraging individuals into self employment is a cost-effective option for Government and now with the launch of Local Enterprise Partnerships (LEP) local authorities need to ensure the economic drivers for their area are effective and efficiently delivered.

Once started, a new business often requires additional support which can be delivered by an appropriately skilled mentor, workshops on relevant topics and the availability of skilled advice freely available when and where it is needed.

If the economy is to grow, then those individuals that have an idea, the drive and the motivation to start a new business deserve support to enable them to succeed. Self employment is no soft option and is not for everyone, therefore there also needs to be training opportunities to enable those that decide self employment is not for them are offered other support to help them succeed.

What needs to happen next

The current uncertainty surrounding the demise of the Regional Development Agencies and subsequent replacement with LEP’s whose purpose is yet to be clarified needs urgent attention. As often seems to be the case with new Government initiatives of this order the idea is sound but the implementation is dismal, takes far too long, looks after vested interests and does not deliver effectively.

A strategy for business support, what, how and where it will be delivered, who pays for it and how is it implemented and evaluated needs definition from the business community and the Lincolnshire Enterprise Partnership.

What we need is leadership, a clear plan with all the financials to back it up and the vision and courage to deliver a robust and first class business environment for Lincolnshire.

What we don’t need is a pyramid of bureaucracy that is more interested in ticking boxes rather than getting practical focused help to those that need it and can make the most use of it.

How about this?

• A team of professional advisers with SME experience to give individual guidance to pre-start and start-up businesses.
• A programme of workshops aimed at addressing the main elements of a business plan.
• A team of professional mentors that can support the business community with practical help and advice throughout their first couple of years.
• Funded by the Regional Growth Fund and supported by the LEP.
• Delivered directly to the end-user by a lean single provider and accountable to the LEP.

Lincolnshire has a reputation of being the poor relation of the East Midlands counties, we need to shout louder and push harder for the resources we need to build a stronger local business community, with all the benefits to jobs and wealth creation that will bring.