The figures quoted for small business failures vary quite a bit, however regardless of this there are a significant number of small businesses failing within the first 3 years of setting up. While some of these failures can be put down to factors that are out of the control of the small business owner, like changes in government regulation and economic downturns, there are still a lot of small business failures that could have been avoided. Here are 5 factors that we believe are critical when setting up and operating your small business, if you miss these 5 then we believe that you are potentially putting your business at risk.
1) Cloud based computing Back in the last century, when you needed computing resources it often meant that you needed to go out and buy a couple of servers and all of the paraphernalia that went with it like a server rack, a UPS system, an air conditioning system etc etc. If, after using this structure for a year or so you then needed either more storage or more computing power you would need to either modify the servers that you have or scrap them and get an even bigger one. Given that Moores law states that the processing power of computers will double every 18 months this meant that any equipment you were buying would be obsolete in a very short period of time.
Fortunately, cloud computing has now made all of these issues a thing of the past. With cloud computing there are a whole range of ways that you can purchase your computing power online. At the cheap end of the scale you can get yourself a VPS (virtual private server) where you can get something that suits your specifications and you pay for it by the month. When you need more power you have the option to upgrade to either a more powerful VPS, a dedicated cloud server or a service like the one offered by Amazon where you can get as much resource as you need and simply pay for it on a per unit basis.
2) Cloud based accounting Accounting systems used to be really temperamental. Any wrong move and you could potentially crash the database and lose your data. Because of this you would need to regularly check your data, complete backups and print out audit reports.
Fortunately, in the 21st century accounting for a small business can be a very different process. With the cloud based accounting services that are on offer from MYOB and Xero your database is managed and backed up at a central location. You can access your data through a variety of methods including accessing by logging in through a website or by making use of a variety of App's. One of the great benefits of cloud accounting services is that you don't have to be at a physical location to enter data or print a report. Theoretically you could have an offsite bookeeper located pretty much anywhere in the world entering your data while you could be reviewing that data and printing reports out from wherever you are at any time in the day.
3) Cloud based backup services If you have been in business for more than a couple of decades you will probably remember the rigmarole that people used to go through to keep all of their backups in order. Many businesses used to adhere to the grandfather, father, son principle where you needed to keep a daily copy, a permanent weekly copy and a permanent monthly copy. All of this would potentially take hours out of a staff members day and if you had to load one of those backups (they were often on cassette tape or floppy disk) it could take you half a day.
Modern cloud based backup services are pretty amazing and will work quite seamlessly within your normal working day. Good cloud backup services will only backup whatever has changed since the last backup so if you haven't had much activity in the last period your backup could be finished in a matter of minutes. Restoration of your data can also be quite painless. The better services will take an image of your system at a specific point in time and simply restore that image. Gone are the old days of losing a mornings worth of work.
4) Virtual Receptionists Getting a receptionist for your small business used to be one of the first things that you needed to do once you actually had your physical office. That receptionist would then answer your incoming telephone calls, open the incoming mail, organise for couriers etc etc. Unfortunately, the workload for an average receptionist was never particularly linear so quite often they would end up sitting around for hours with nothing to do.with a virtual receptionist you can get the best of both worlds. On the one hand you can have someone who is sitting there waiting for your incoming phone calls and then answering those calls in a professional and responsive manner, on the other hand you will only have to pay for that service when they are actually doing something. During slow periods when you are not actually getting any calls, there will not be any additional costs. This makes really good sense for startup businesses that are not really sure of the potential workload.
5) Get a virtual office Setting up a physical office can be extremely expensive. Not only do you need to pay for the office itself but you will also need to pay for bonds, utility connections, furniture and technology. Even after you have set up your new office for your new business you may still be unsure of how much space you actually need. Many businesses under or over estimate and are then stuck trying to either get out of leases or find some additional space.
With a virtual office you don't have many of these issues. A virtual office means that you can use the address (and potentially some of the facilities) of a CBD office without having to pay the exorbitant rent cost. With a virtual office you can work from wherever you want and just travel to your office address to collect mail or courier deliveries. Virtual addresses generally cost just a small fraction of the cost of a regular office so you will have more cash available to build your business. Another great aspect of virtual offices is that you can quite easily take your business national or global by arranging additional locations.