On Monday, I posted the first of a 5 Part Blog I put together on why business fail today and how to avoid similar mistakes. Did you see it?
If you missed Part One, you can read it here.
I decided to include the next 2 reasons in this Post.
A common, yet fatal mistake for many failed businesses is having insufficient operating funds. Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed.
Doesn’t it always seem like there are fists full of cash available when you don’t need it, and then when you do, everyone has their hand in their pocket?
Banks are always willing to loan money when it is convenient for them, not you. That is one of the reasons why adapting your business plan to the market as you wade through the difficult seas of business is so important.
Start-ups and 1st time business owners routinely overestimate how “easy” it will be to sell their service or product. Many have an unrealistic expectation of incoming revenues from sales. This happens a lot in the service and restaurant businesses. There are a lot of hidden costs that need to be covered and not pricing your goods or services correctly will leave you short at the end of the day.
It is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. Starting is usually the easy part. You can get started in most industries with next to zero initial investment. It is important to take into consideration that many businesses take a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs.
It is an amazing feeling when you finally take “THE LEAP” & go out on your own, buy a business, or after years of working on it, your business takes off. The downside is that in order to keep it going, you need to invest more. “You need to spend money to make money.” But where can you get it? There are now small business loans & lines of credit that are no longer with sharks. You can start there. The other place is to work with The Aebli Group to create a planned ‘CASH ERUPTION!’
Many reports that come out each year on business failures cite poor management as the number one reason for failure. New business owners frequently lack relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Unless they recognize what they don't do well, and seek help, business owners may soon face disaster.
Business leaders must also be educated and alert to fraud, and put into place measures to avoid it. Fraud most commonly occurs from INSIDE the company not outside. In retail, almost all theft is an inside job coordinated by employees not from customers. It won’t matter how big the security guard is at the front if all of the merchandise is leaving out the back.
Neglect of a business can also be its downfall. Care must be taken to regularly study, organize, plan, control and adapt all activities of its operations. This includes the continuing study of market research and customer data, an area which may be more prone to disregard once a business has been established.
A successful manager is also a good leader who creates a work climate that encourages productivity. He or she has a skill at hiring competent people, training them and is able to delegate. A good leader is also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future.
You are not a born leader. No one follows you while you’re crawling around in your diapers. Leadership comes from making bold decisions in the face of adversity. Leadership comes in the form of being valuable when there is no expected return. Leadership comes from creating your own opinions & beliefs and then sticking by them when they are tested. Employees, family & friends watch every move you make & at The Aebli Group we have created The “#ProvenProfitable Coaching Group” to help be a guide to improve your leadership & business skills.
There are 2 more posts to this series - so I would love to get your feedback as to what you think so far. Please leave a comment in the section below. Let me know if you have any questions or would like to schedule a call to discuss in more depth.