With more businesses starting each year, how can start-ups stand out, asks JOSH YOUNG. Here he delves into how Australia got into this situation, and how businesses can stand out in a more saturated market.

“MOST start-ups don’t succeed: more than two-thirds of them never deliver a positive return to investors,” says Tom Eisenmann, Harvard Professor of Business Administration and author of “Why Startups Fail: A New Roadmap for Entrepreneurial Success”.

In the age of digital, it has never been easier to start a business, but has that translated into more success stories? Well, the jury is still out on that one. According to the Australian Bureau of Statistics, as of the June 30, 2022, there were nearly 2.7 million active trading businesses in Australia alone. However, estimates suggest that 20 per cent of businesses won’t survive their first year, and a whopping 60 per cent are unlikely to make it past year five.

So, why is that? What makes standing out in the field of business such a difficult prospect? And what can new businesses learn from the mistakes that have left other businesses to falter?

Lots of new businesses, limited opportunities

Let’s face it, starting a new business is not a unique proposition. In fact, a new business is created nearly every minute in Australia. So how do you get your head above the froth of new businesses and seen by potential customers?

Advertising and marketing are two elements of this, but being able to stand out, and make a difference as a business, can be just as important for your start-up’s survival. With more than 70 per cent of businesses failing within the first five years of operation, getting your feet off the group is important. As such, it’s critical to understand what it takes for a business to succeed within the market.

Of course, there will be some factors that are ultimately out of your control. Having knowledge and understanding as much as you can about why businesses fail can be a great way to drive success by avoiding the mistakes of others, which is why an online MBA in Australia can be useful.

Adapt to changing market conditions

Start-up change can be hard and fast. Sometimes regulation changes can have a significant effect and as a result, you may need to adapt. In recent times, fintechs specialising in buy now, pay later solutions have been hit with the reality of regulatory change – and has resulted in the winding up of some start-ups.

Alternatively, you can have significant, environmental effects that affect the viability of business. These can be out of your control, such as the Black Summer bushfires of the 2019-20 summer season. The recent global pandemic has highlighted just how hard it is for business to succeed, particularly in adverse environments. 

Sometimes there are just events that get in the way, and you have to develop creative solutions or pivot to make sure that things work. In some cases, you might not even have a workforce to rely on – as a start-up, how do you address that?

As you set up your start-up, one of the best ways to prepare for future disruption is to plan for adverse situations. Consider elements such as a business continuity plan if disruptions impact your business. Some of the questions you may like to consider:

• What do you do if you are required to close for a period of time?
• If there’s a product recall, do you have a plan in place?
• What’s your strategy if your cybersecurity is compromised?

By having strategies in place that enable you to doubt to these changing conditions you can prepare yourself and have a much better chance to succeed in the long run.

Standing out from the competition

It’s important to understand that ultimately you need to be able to stand out from your competition. There were several social media networks in the early 2000s, but Facebook reigns supreme in the 2020s. Ultimately, it was a product that was catchy and memorable and presented features that, while not necessarily unique, captured the imagination of users in a way that encouraged them to use the product, and to recommend it to their friends.

Much like social media start-ups, to be successful, you need to be able to stand out from the competition. It’s okay if your features are not necessarily unique compared to your competition – being able to express them in a way that demonstrates an understanding of customer needs in driving sales and pivoting towards future success.

The importance of research and industry learnings

Research and experimentation only goes so far for business. As a small start-up, you might not necessarily have the time or capacity to undertake large-scale user testing to understand what works. This is where market research and industry learnings come in. Be sure to engage with your peers within the start-up space, and other network connections, to get an idea of what’s working and what’s not in the start-up space. You can gain valuable insights as to what strategies succeed or fail over time, which you can then use to drive successful outcomes.

Don’t be afraid to join an industry group or a round table to receive valuable exposure to other businesses, or to gain valuable insights as to what it takes to be successful as a star. You don’t have to do all the research alone, and industry groups and round tables enable you to gather viable market insights, without the excessive costs or failures of having done it yourself.

Remember – it’s okay to fail

One final note, this time on failure. Remember, it’s okay to fail. Ultimately, you want your businesses to succeed, but sometimes there can be the factors for success that can be taken away from you. 

Reasons that are out of your control may include the impacts of significant global events – such as the impact of the recent global pandemic on construction businesses. A lot of that is driven by factors that are out of control of builders and concreters alike. A complex set of financial and resourcing pressures are driving businesses to collapse – ultimately, beyond the fault of a single entity.

Likewise, you may end up in the situation where your business is simply not viable.You may think that the underlying theories might be perfect, it just may be the wrong time. Give it a go with business, but be realistic. If something doesn’t work, and you’ve tried to make it work – it’s okay to accept that it may never work. That’s okay. Shutter things up and try again in the future.

At the end of the day, sometimes you fail and sometimes you succeed. It’s what you learn along the way and how you adapt to it for future businesses, that is the most critical part of your learning.

In the meantime, if you’re looking to start up a business and to gain valuable insights into how to run a business, a qualification, like an online MBA, may be of interest to you. If you’re interested, get in touch with a career adviser and speak to them about how such a qualification can be helpful in providing you with the skills and techniques necessary to run successful start-ups.

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