Everyone knows that the first year of business can be extremely tough. Many entrepreneurs never make it past this hurdle, so if you’ve successfully navigated your startup’s first year of business, then congratulations.
However, the hard work doesn’t stop here. As you head into your second year, you’ll be faced with a whole new set of challenges, all whilst still dealing with the obstacles you faced in the first year. Your sales may still be low, your advertising efforts may still be underdeveloped, and on top of this, you could be running out of the enthusiasm that got you through your difficult first year.
Therefore, as your first year of business draws to a close, it’s time to step back and assess your journey so far. Then, you can use this knowledge to become even more successful in your second year of business. With this in mind, here are the main things that every startup needs to do heading into year two.
Evaluate Your Mistakes
During your first year of business, you’ll be learning along the way and doing everything in your power to stay afloat. However, once you survive this year, it’s a good idea to evaluate your journey so far and compare your progress to your initial business plan.
In the beginning, you may have had a clear vision of where you wanted to go with your startup. However, things rarely go completely to plan, so you can probably identify plenty of mistakes and deviations during your first year that you can then evaluate in-depth.
What was successful or unsuccessful in your first year of business, and would you do things differently if you could try again? Did you stick to your initial strategy, or did you have to pivot to achieve success? Evaluating your first year of business is essential if you want to approach year two with the right mindset and ideas.
Reassess Your Business Plan
Upon reflection, you may realise that the course corrections you had to make in year one suggest that your initial business plan wasn’t quite fit for purpose. You may have had a concrete strategy in the beginning, but sometimes experience can teach you that your initial ideas were a bit misguided.
This is why you should always revisit and reassess your business plan at the beginning of year two. You may decide that your original plan is still applicable, or you could come to the conclusion that you need to create a new plan and strategy based on the knowledge you’ve acquired. In any case, taking the time to reassess your business plan is always a sensible idea.
Set New Goals
Using your new business plan and the experience you gained in your first year, you should set new goals that better align with your startup’s focus. These new goals should be informed by the mistakes you made in your first year, as you’ll now have a better understanding of what’s realistic for you and your business.
Don’t forget to set specific targets and deadlines for these goals. For a goal to be useful and quantifiable, you need to be able to measure your progress and determine when you’ve succeeded or failed. Having KPIs for each goal is therefore a must.
Pay Attention to Changes and Trends
No matter what industry you’re in, nothing ever stays the same. During your first year of business, you may have simply been focusing on surviving, but now that your startup is more established, you need to pay attention to industry changes and trends if you want to stay competitive.
This also applies to changes that affect all other aspects of your business. For example, you’ll need to keep up-to-date with changes in business regulations and accounting regulations, such as the new Making Tax Digital initiative. By failing to adhere to new laws and regulations, you could severely damage your startup’s finances or even go out of business.
Focus On Marketing
Money is always tight during the first few years of business. As a result, many startups struggle to allocate enough cash to their marketing fund. This may seem like a sensible cut to make, but marketing is one of the most important areas of your business. After all, who’s going to buy your products or services if nobody has heard of you?
So, what’s the solution? The importance of marketing is undeniable, but as a new startup, you can’t spend money you simply don’t have.
Luckily, non-traditional forms of advertising can be very cost-effective, and depending on your target audience, they could potentially be even better than traditional advertising. In your second year of business, you should definitely ramp up your social media marketing efforts if you want to reach new customers and connect with existing ones. Make sure you set up social media accounts on all relevant platforms and post regularly to maintain engagement.
Ask For Feedback
One of the greatest benefits of social media is that you can directly interact with your customers. Through this interaction, you can build trust and brand loyalty, and in addition, you can also ask for feedback and figure out what your customers really want.
As a new business owner, there will be a lot you need to learn throughout your journey. This is especially true in the first few years of business, as you could find yourself making plenty of mistakes and course corrections when encountering new obstacles. By asking your customers for feedback, you’ll gain invaluable insight into what they want and therefore what you should focus on changing and improving.
Work Smarter, Not Harder
It’s no secret that starting a business is a lot of hard work. Many new business owners claim to work well over 40 hours a week, often sacrificing evenings, weekends and holidays to ensure their business’s success during this difficult period.
During year one, you’ll probably find yourself following this well-established pattern. However, too little rest and relaxation can cause a lot of damage over time, leading to issues such as excessive stress and burnout.
Therefore, in year two of your startup, you need to start thinking about how to reclaim your work-life balance without harming your business. Investing in software, such as accounting software, project management software and communication tools, can help you streamline various processes within your business, which will then boost efficiency and cut down the amount of time you have to spend on administrative tasks.
Keep an Eye on Your Cash Flow
Having a healthy cash flow should always be your biggest priority. One of the most common reasons why startups go bust is cash flow issues, so you need to keep an eye on this at all times if you want to ensure success.
In particular, as you decide to scale your business, you should watch your cash flow and make sure you have the revenue needed to expand. Don’t bite off more than you can chew by expanding your business before you have the cash to support this.
Approaching Your Second Year the Right Way
The hard work isn’t over once you make it past your first year in business. During this time, you’ve gained vital experience, made mistakes and learned so much more about your industry, and in your second year, you can put all of this new knowledge into practice to make your business even more successful.
Don’t forget that there are many resources and support networks that can help you during this time. Reach out to your local business community to start networking and making connections in your industry, or try out an online business course to learn more about how to manage your startup as it grows. With the right support, you can develop your skills as an entrepreneur and help your business truly thrive.