Running out of cash I would venture a guess and say that 100% of businesses that run out of money close their doors. Ok, joking aside, it’s obvious that if your money is gone, so is your dream. Cash and cash flow means chances. More chances to change. More runway to take off. More ideas to execute. Basically, cash buys time and with sufficient time, you can overcome any obstacle. For your business, the golden rule is MONEY = LIFE. So spend wisely and keep on top of your cash and cash flow status DAILY, either by means of accountants (or their software - XERO is our favourite here), or by developing an in house CRM.
Losing a critical employee If you have a business that makes shoes and your shoemaker quits...well, you get the point. But no, this could be anyone. A co founder, customer expert, developer etc. Regardless of what role they play in your company, you literally can't continue without this person. And, being a new business with money constraints, you have to get a new person on board with limited cash. There is no obvious solution here, but time spent in getting to REALLY know your employees, and giving time to them to understand you in return, creates a favorable work environment that goes a long way. I would suggest looking at Simon Sinek's Golden Circle theory here for guidance.
Godzilla Client This is that one client, who brings in most of your revenue, but also hogs most of your time. Even though for a startup this is a great way to get off the ground, in the long run, it will cost you. If the success of your business is dependent on the whims of that one client, maybe it’s time to start evening out those odds. More insidiously, a single powerful client can have an outsized impact on your strategy, product decisions, pricing, and support. By focusing too much on their particular needs, you ignore other opportunities in the market. So make sure to diversify your client base as widely as possible.
Rock platform If your business is not built on a solid platform, sirens should be going off right about now! Be it that your platform is software that is outdated or not working for you, or a product utilising for example free API's. If you have to suddenly start paying for information that was free when you started, well guess what.Yep sirens...I know. This strategy will be a knife to the proverbial heart of your business. Ensure you platforms are rock solid.
Strike 1, you are out The market for your product is so important. You might think you have the best idea ever to solve a big problem for everyone, just to find out no one else has that problem. Solving a problem in the marketspace is what a business is built around. Not understanding that there might not even be a problem, is where businesses go to die. Make sure you understand your market and more especially, their needs, before building a business around that specific solution.
Top of the list A business lives, and dies by customers. You need regular and new customers. The more, the better chance of survival you have. Make sure you have multiple channels of acquisition. For example, if your only way of acquiring new customers is google based, and the Google Search changes its algorithm, your business could lose its top spot resulting in a loss of 1,000’s, even 10,000's of clients you had yesterday. If you do not have other means of gaining clients...well yes, you guessed it. No clients, no money. No money, no business.
Wrap it up Look, honestly, most businesses fail within the first 5 years. And this is because people don't understand it. A lot of people think, AND I MEAN A LOT OF PEOPLE, that having your own business is like a working holiday. The money comes in while you sit on the beach. Well, unless you own that beach and are currently busy renting it out, you are going down. So read up, ask questions to those of us who has done it (if you have questions email me I will gladly answer as best I can). And be prepared to knuckle down for a long time. All I can say is, it will be the ride of your life. Hold on!