Going Against the Tide: How Businesses Can Cope in a Fierce Market
April 18, 2016
Australians would rather start a business rather than work as full-time employee. This is why there’s been a big increase in the number of new businesses in the past few years. Figures support this observation. The Australian Bureau of Statistics has published data that show a steady increase in the number of businesses since 2013. Working an eight-to-five job is no longer the most attractive option; starting a business seems to be the star of the show at the moment.
Taking Back Control
Looking at this trend a little more closely, it’s not really surprising that many would choose to go into a small business rather than full-time employment. After all, owning a start-up essentially means total control over, well, everything. As a business owner, you get to be in charge of every aspect of the organisation, you get to do something you enjoy doing while staying on the driver’s seat. For many, this is the perfect setup. But naturally, small businesses are not always about success stories and increasing annual profits.
Not All Profits and Success Stories
Although owning a business has a lot of attractive perks, it comes with risks. The worst case scenario is you lose the company and go bankrupt. It is unpleasant but this is a reality many entrepreneurs have faced and will face. Statistical data indicate that the industry of a business does matter in gauging its longevity as a start-up. The ABS took a look at the small businesses across various industries and checked which ones survived for four years, from 2010 to 2014. From the findings, it is notable that the lowest survival rate is at 53.3% in the sector of public administration and safety. Businesses that belong in the administrative and support services, accommodation and food services, and arts and recreation services are at 53.5%, 54.2%, and 56.3% respectively. Completing the bottom five is the information media and telecommunications industry with at 56.4% survival rate. But there are industries that seem to be thriving. Coming in at fifth place in terms of the highest survival rate is the financial and insurance services at 66.1%. Mining,agriculture, forestry, and fishing businesses have high success rates at 66.7% and 69.6%. Meanwhile, the rental, hiring, and real estate services sector takes the top two spot with an impressive 71.7% survival rate. And finally, we have the most start-up-friendly sector, the health care and social assistance industry, which sits at a comfortable 74.6% survival rate. The information might make some anxious to start a business, but the situation is not bad at all. At worst, there are at least two of four businesses that make it past the four-year mark; at best, three out of four. Besides, the industry you choose to participate in is not the sole factor in the likelihood of going belly up.
The Location Factor
The same set of statistics seem to suggest that the location has something to do with how well a business fares over the years. By the numbers alone, Tasmania is the clear winner in terms of success rate for new businesses as it comes at 65%. Closely behind Tasmania is South Australia, with an impressive 64.7% survival rate. Victoria and New South Wales rank third and fourth with 62.9% and 61.7%, respectively. Western Australia is at 60.9%, whilst the Northern Territory comes up a decimal point short to meet the 60-percent mark at 59.9%. Queensland and the Australian Capital Territory are at the bottom of the list, with 59.4% and 58.9% survival ratings. Again, the figures are not exactly discouraging for up-and-coming business owners. Even if you factor in the business’s location, nearly 6 out of 10 businesses still make it through their first four years. That is not bad by any means. Additionally, these are only two factors that influence a business’s stability – and they are not the only things that count in running a business. Many other variables come into play when you launch a start-up. Yes, there is always a risk that comes with any business-related decision (including starting one), but that is something you can always prepare for.
Going Up Against the Odds
In running a business, there will be a time when the odds seem stacked against your favour. But there is always a way to beat the odds. As long as you make the right, informed decisions, it is possible to endure through challenging times, stay afloat and come out on top. First and foremost, it is important to stabilise the cash flow of the businesses. Receiving financing through investments or business loans is one thing; making that capital work is another. It is necessary to establish where you source your money and when it comes in. Additionally, make sure you receive payments from clients on time. www.capify.com.au has already talked about effective strategies in dealing with late payments in a recent blog entry. These techniques would prove useful, if ever you face such a situation. Setting your brand apart from the competition is also a good thing to do. When a business has an easily identifiable identity, clients are more keen on supporting it. Branding can do wonders for one’s business. Lastly, as much as possible, innovate and improve the business. It does not always have to be a major breakthrough, although that wouldn’t hurt. Simple improvements in the overall efficiency of production or streamlining a process are already good enough. What’s important is to ensure the business be dynamic and not static. Running a business is and will always be plausible. As long as you get to do it right, the “survival odds” increase and sometimes becomes a moot point already.
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