Research has shown that the following mistakes have lead to business failures in the past.
I too have found that this fisrt point is relevant. Many businesses have a lack of direction. This means the failure to establish clear goals for each part of the business and invariably no business plan.
Now you say “but I know where I am going and I have a business plan but am still struggling”
Well, perhaps the plan is old, not updated or not reviewed regularly to suit current market conditions or it may be the wrong plan for the business. You need to know what each part of the business is to achieve and have reports to monitor the progress of each part.
The next mistake is impatience. Here many businesses try to do too much too soon. One example may be spending too much on advertising and not enough on building a customer base. I have found that it takes up to twice as long and it costs almost three times as much as originally estimated to achieve a goal.
“Now hold on a minute!” you say. “I have been patient all the time, I need to get the business growing!” Well, yes you need to grow the business but it needs to happen in an orderly fashion or else you may find that you sign up people for your product or service and find yourself inundated and can’t keep to your promises. The alternative may be true too in that you spend all the cash on ineffective and unmeasured advertising and wonder what went wrong?
The third mistake is greed. Here businesses try to charge too much in trying to become wealthy without building a market reputation. I recommend that making a reasonale profit in the beginning and raising your prices as demand for your product or service increases is the better way to go.
“I am entitled to a reward for my efforts and capital invested” I hear you say. I agree, but while the business is still building a reputation in the market place and competitors are lurking around each corner, then you need to moderate your expectations and grow the business and your income as the business becomes a market leader over time.
Another mistake in business is insufficient working capital. Many businesses rush off and think that they are in business but don’t plan for the costs, taxes, capital expenditure, etc. and suddenly find that they have run out of money. Here it is important to have a business plan so that many of the costs can be anticipated and planned for. In addition, the plan will program potential capital expenses in the future which leaves you time to negotiate with finance companies, if required.
“How do I access additional capital?” you ask. There are still lenders out there who are prepared to finance aspects of your business provided they are happy that the business has a solid plan and growth strategy in place. If necessary, I have access to several lenders in the market to whom I could refer business owners.
The fith mistake, poor quality of product or service. It will be difficult to sell your product or service initially and impossible a second time. Poor quality will make it hard for you get paid what you have sold initially. I think that businesses need to establish quality controls so that a good product or service is provided in order to build up a reputation in the market place.
The sixth mistake, poor cost control. I have found that many businesses spend too much, especially in the beginning. A business needs to retain as much cash as it can because a business will no longer survive if the cash is gone.
“But costs keep rising in this day and age!” so you tell me. Some costs are fixed and others are variable. The fixed costs like rent, etc. are difficult to alter. However, the variable costs can be and here it is important to ask the question of every expense, “is this necessary and is it going to help create greater profits?”. Without the curbing of costs it will become impossible to stay afloat in business.
The seventh mistake is insufficient sales. When the sales team loses momentum and management is too busy operating a business the businesses loses money! Sales must be the priority in any business and all other aspects must come second. This where I have found many businesses lacking the clarity of being in business.
I hear you say that all these aspects have or are affecting your business performance. “What can I do about it”? Well, it is all in the planning of where the business is going. If you do not plan each phase then you may as well sit on a rollercoaster and pray that you have more ups than downs.
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