The entrepreneurship revolution is here. Everyone wants to jump onto the ship. People have more hope and faith in starting their own businesses than being employed. They have lived to learn that a personal business is more motivating and paying than a job sought even from a big organization. It is therefore logical that you start your own small company. The truth is written on the walls that running a personal business is an exciting venture that can lead to the financial freedom.
On a day to day basis we have witnessed friends and family members pursue their own entrepreneurial dreams only to see them shattered not a year into their short-lived careers. This is mostly due to a number of fatal but avoidable reasons. Success in business is not by luck or hereditary endowment. It is about being equipped with special business skills that most fresh entrepreneurs lack. Most businesses are brought down the drains by a number of factors.
Lack of a business plan is the number one factor. A business plan goes beyond knowing what your business will be and how you will sell your products or services. You need to have a business plan written out, including your short and long term goals, the business’ finances for labor and production equipment, your target markets and marketing strategy. Having one which outlines every detail will guide your business to the right path.
Businesses started for the wrong reasons are likely to fail. Starting a small business simply because you want to be rich can lead to an unfulfilling experience, where you will always be looking for schemes that can bring you fortune. Before you do, think first about your own interests and passions. Do you believe you can give something of value to people at large? Are you driven enough to overcome the many inevitable obstacles an entrepreneur will face?
Most collapsing businesses are smothered by insufficient management. Small business entrepreneurs usually come into their industries with little to no knowledge of handling the multiple facets of a business such as financial management, employee relations, advertising and other essential responsibilities. Educate yourself through short business and finance courses, or hire managers who have expertise in the fields where you are lacking.
Lack of capital affects both small and large businesses. It is wrong to think that businesses will be making profits for their beginning operation cycles, spending most, if not all, of their resources immediately, only to find out later that they will not have enough funds to start the succeeding cycles. Consider every possible cost, that’s, overhead, production, equipment and others and save enough money that can be used for at least one fiscal year despite poor sales.
A bad business location can make a business collapse. It is not enough to set up a store at a location with high human traffic or with a very cheap lease. Opening a restaurant near a school campus can seem like a good idea, but don’t expect too many customers if the food is expensive and there are much cheaper alternatives around. You need to consider your target market and their habits, as well as the direct competition in the area. Don’t be afraid of spending on prime location, as the increased rate of customers coming into your store and making a purchase will make up for the initial cost.
There are businesses that take off successfully but end up collapsing. This is due to uncontrolled growth. Growth is a good thing unless it is left unchecked and your generated revenue can’t keep up with the expansion. If your business experiences great success, do not be overeager to spend your profits by immediately buying more equipment or opening up new stores. Stick to the strategies you have set so you can still grow without bankrupting the business.
It is important to fight financial neglect. Cash is the lifeblood of any business, and there will be no business once that runs out. Therefore, it is imperative that small business entrepreneurs practice strict financial record-keeping so that every penny is duly accounted for. Knowing exactly how much money is going in and out of your business will correctly guide every decision you make.
Incompetent employees have always brought businesses down. Having a great business plan will amount to nothing if each objective is tackled with incompetence. Employees who are lazy, dull, bad-mannered and unmanageable will not just cut down on productivity, but will also have a negative effect on the work environment and customer or client relations. Follow strict hiring guidelines and subject your hires to rigorous training to ensure quality output from each one. It is never too late.