How to Survive Your First Year in Business

If you’re wondering how many small businesses fail in the first year, the answer to that question is roughly 20%, whilst almost 60% do not survive past their third year according to fundsquire. 

In this article you’ll find a list of different ideas and tactics you might want to employ to help keep your start-up or SME afloat in its formative years.

Ways to survive your first year of business

Setting yourself some achievable yet effective first-year business goals can be a good way to help keep yourself and your team focused and on track. Be sure that these goals include not only ways to help you make money, but also ways to save it and avoid spending too much unless absolutely necessary.

Read on for some suggestions as to what your action points could include.

Get financial backing

If your company is a science or technology-based start-up, there are lots of investors out there who are likely to back you. The Early-Stage Venture Capital Fund from UK Innovation and Science Seed Fund could be worth looking into. Alternatively, if you can’t find a suitable investor in your field, there are several other ways of sourcing funds to get your business off the ground.

First of all, you could save the money yourself and allow your business to grow slowly. However, if you feel that a larger cash injection is what you need to really kickstart your business, then you could consider a start-up loan. In the UK, these offer you up to £25,000 at a fixed interest rate of 6% per annum, repayable within 1-5 years. 

Crowdfunding could be another viable source of seed money and is a method that has worked well for several companies. The basic premise here is that you advertise your idea, and potential investors who like your idea contribute cash until you’ve met the target you set. 

RELATED: 9 Wildly Successful Crowdfunded Start-ups

Peer-to-peer business loans can prove another viable option. Loans of up to £500,000 are available in this way from providers such as Funding Circle, Zopa and Rate Setter.

An angel investor could also help if they find your business idea particularly interesting to them or deem it to be potentially lucrative in the future. A list of the UK’s top angel investors can be found in the Entrepreneur Handbook. 

If you are still in need of funding, venture capitalists could be suitable for you. The British Private Equity and Venture Capital Association could help you with this.

See if you could benefit from a tax break

There are several government initiatives that provide tax breaks for first-year businesses. You could benefit from small business rate relief on any office premises you might purchase or rent. Alternatively, if you run a charitable organisation or are based rurally, you could benefit from charitable rate relief or rural rate relief respectively. 

Allowable business expenses are another way to claw back some pennies. Any business of any size can legally claim a tax break on expenses needed to keep your business running. These include office costs, travel costs, clothing, staff, financial costs, training courses, advertising and marketing and stock you might buy to sell on.

Minimise your outgoings

Although it might sound like common sense, making sure your outgoings are less than what you have coming in is the first rule of any profitable company.

One way you could do this is by reassessing your utility bills. Are you on the best rates when it comes to energy prices? Have you selected the most affordable internet provider? Should you be paying that much for your office’s water supply? Could you even downsize your office or make do without one altogether? 

Plenty of companies today work remotely, which can significantly reduce your running costs. If you choose to operate in this fashion, however, you might be interested in meeting room rentals for important meetings with potential clients or investors, or even occasional access to a hot desk or meeting room so you and your team can intensively focus on particular tasks.

If you travel around the world as you work, you may be interested in renting airport meeting rooms, or if you are based in more of a central hub, meeting rooms for rent can be found in most major towns and cities.

With some ideas as to the various ways, you could start saving your company money, all that’s left to do is find an accountant who might know of other tax breaks you’re entitled to, or learn how to complete your own tax assessments each year.  Being smart with your money will help ensure your business survives its first year and continues to thrive for many years to come.