Starting and growing a business can be hugely rewarding, both personally and financially, if you do it well. However, when you begin your start-up journey, it’s important to set reasonable and measurable expectations, both in terms of business revenue and growth as well as your personal expectations.
In the excitement of the start-up phase, it may be tempting to set yourself big targets – but if those goals are unrealistic, you’ll struggle to achieve them and can view your new venture as a failure. Risk trying to grow your business too fast and the pressure to succeed against unrealistic goals can impact negatively on your physical and mental health.
Want to learn more about the process for starting up and running your own business?
Set business expectations
Your business plan is important for setting out realistic expectations and forecasts for key business activities. It should include your target customers, market and competition, marketing and sales strategy, management and personnel, business operations and financial forecasts.
Use SMART objectives
Use SMART objectives to create realistic goals and targets for your business, ensuring expectations are kept grounded:
- Specific – Target a specific area for an objective, such as sales, customer service or marketing goals.
- Measurable – What are you trying to change? How will you measure it? Set a target to achieve over a set period.
- Achievable – The objective should be stretching, but possible. Avoid setting targets that are impossible to achieve.
- Relevant – Ensure the objective makes sense to the specific area it is focused on and is aligned with long term goals.
- Time-bound – Make sure the objective has a specific period or deadline, such as to achieve a target within 12 months.
Determine a realistic market size
In the excitement of starting a business, it can be easy to overestimate the number of potential customers who will buy your product or service. You might think your business has a potential market size of millions across the world, but is that realistic for your start-up to reach?
While it’s good to be optimistic in business, you should carry out detailed research and work out exactly how big your market is by knowing your TAM, SAM and SOM:
- Total Available Market (TAM) – The total market demand worldwide for a product or service.
- Serviceable Available Market (SAM) – The portion of the TAM that your product or service can capture.
- Serviceable Obtainable Market (SOM) – The segment of the SAM that you can realistically acquire.
You can conduct market research in two main ways: primary research and secondary research.
- Primary research – This is research you carry out yourself or commission someone else to carry out that sources information directly from your target audience. It includes surveys, polls and focus groups.
- Secondary research – This is research previously carried out by another business or organisation available for free or as paid-for reports.
A cashflow forecast is one of the most important parts of your business plan. A realistic forecast will show that you have enough money to run or expand your business or warn that you’re spending more money than you’re generating.
It’s easy to be optimistic about your cashflow and forecast big numbers, but that can be risky. It’s better to be realistic and account for factors that could affect cashflow, such as late-paying customers or unexpected costs.
Your business plan should include a 12-month cashflow forecast. It’s wise to get into the habit of regularly monitoring your financial position and know your outgoings and income for the next day, week, month and quarter. That way, you’ll be able to spot any cashflow gaps and take action before it becomes a major issue.
Download our free cash flow forecast template.
There are many ways you can promote your business, such as social media advertising, public relations and email marketing. But with most start-ups on a tight budget, you need to be realistic about the amount you can invest in marketing and the return it will generate.
Understanding your audience is vital before deciding on which channels to use. Create customer personas to represent your audience based on demographics such as age, gender, location, income and job role. Doing this will help you narrow down the channels to target, such as spending your money on writing content or paying for advertising on social media networks.
Once you’ve decided on your marketing channels, set SMART objectives for what you want to achieve and start with small tests to measure results before committing more money. Small tests can help you set realistic expectations on how your marketing will perform.
One of the most important metrics is cost per acquisition (CPA). CPA measures the total cost to acquire one paying customer on a marketing campaign which shows the value you’re getting from the amount you spend and whether it’s profitable. For example, if you invest £50 in Instagram marketing and make two sales, your cost per acquired customer is £25.
Testing will provide the information you need to decide where to invest. If a channel works and your CPA is low and profitable, you can then invest more budget. That channel may stop working for you in the future, so you must constantly measure the results.
Set personal expectations
The personal impact of running a start-up is just as important as your sales and revenue forecasts. Running a business is not like a 9–5 job; it can take over your life. It’s vital that you organise your time and put processes in place to remain efficient and productive without harming your physical and mental health.
It’s easy to underestimate the amount of time and effort it takes to start and grow a business. Many founders find that they have so much to do they end up doing very little and get frustrated.
From the start, get into the habit of managing your time. Schedule your day and prioritise the most important tasks. Use online calendars and time management apps to schedule meetings and set reminders. Splitting your activities into 25-minute tasks followed by five-minute breaks, known as the Pomodoro Technique, is a common tactic used by entrepreneurs.
Know when to outsource
With start-up budgets tight, it’s tempting to want to do everything yourself. But if you spend hours on something that an expert could achieve in minutes, you risk neglecting important areas and slowing down the growth of your business. It can therefore be much more efficient to outsource. Accounting, human resources and marketing are among the tasks you can pay an external expert to deliver.
It can be hard to separate work from your personal life as an entrepreneur, but you mustn’t let running your start-up harm your physical and mental health. You might want to work 18 hours a day to get everything done but getting a good amount of sleep is vital. Taking regular breaks is important too and consider relaxation techniques such as yoga and meditation.
One way to ensure you have time for yourself is scheduling set times in your calendar and only having a meeting with someone else during those times if it’s absolutely essential to your business.
As your business grows and you take on staff, delegate tasks to other members of your team. Knowing when it’s time to let go of certain activities is an important part of succeeding as an entrepreneur.
Don’t be too hard on yourself
If after a few years into running your business, you don’t have 20 staff or a fancy office, you might feel like you’ve not achieved success. Don’t be too hard on yourself though. Growing a business is a series of victories so celebrate your wins, however small they might seem. Keep true to your plan but adapt it as circumstances change. Measure your activities as much as possible and change tactics where necessary.
Success means different things to different people so stay realistic and enjoy the journey.
Want to grow your business and personal skills? Check out our free online courses in partnership with The Open University on effectively launching your business. Our free Learn with Start Up Loans courses include:
- Digital thinking tools for better decision-making
- Understanding and managing risk
- Making decisions
- Entrepreneurial behaviour
Plus free courses on finance and accounting, entrepreneurship, project management, management and leadership.
Disclaimer: While we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.