Don’t let these 5 mistakes cost you the business you worked hard to put off the ground.
Every businessperson I have interacted with has reiterated that there’s nothing glamorous or easy about trying to keep a business afloat. Beyond passion and identifying a need, businesses are mainly established to make profits. In the early days of your business, you will find yourself working around the clock to keep it afloat, from attracting and retaining customers to keeping your finance books healthy. Although nothing is guaranteed, avoid these mistakes to alleviate business failure as much as possible.”
- Failing to differentiate between cash flow and sales: While you may have a long list of sales on record, it’s a different story if they don’t come through on time. While sales revenue measures the sales your business is able to make, cash flow, which includes every transaction measures the overall performance of your company. Never overrate how quickly you will start making money while taking for granted the expenses you will incur. Ensure a healthy cash flow by tracking all your costs, from your invoices to when customers and clients will pay. Importantly, don’t confuse every cash that comes into the business as profit.
- Operating your business with your personal account: Major disaster! Don’t use your personal account or personal credit card to fund your business because not only will you find difficulty in keeping track of how much money the business actually is making or losing but it will be a major headache when it comes to tax season. Rather open a business account from the first day of operation, which will make it easier for you to obtain a business loan if you really need one.
- Underestimating the price tag: Depending on the industry you are in it’s important to get the pricing of your products or services right. One of the first steps to work out your price tag is to look at all the costs it takes for your business doors to open; from rent, raw material, labour to your time. Also, check out what your competitors are charging and never underprice to try to attract customers as this can cause major losses. If the quality of your services stand out, you will sure attract the right customers who will be prepared to pay for the value of what you are offering.
- Being a jack-of-all-trades: Your strengths will speak volumes for your business, but you won’t know everything. Try to look for reasonable ways to outsource services in areas where your business lacks, such as marketing and bookkeeping. Invest as much capital as you can afford in your business but don’t overspend on things you don’t really need. I have seen flourishing businesses who worked from home and worked their way up to affording decent office spaces.
- Not investing in creating a relationship with customers: Your customers are your bread and butter. Always aim to attract your ideal market and find out what they really need and how they feel about your business. Their feedback can spark creative ways for you to offer better services that will make you stand out from your competitors.
What business mistakes have you successfully avoided since launching your businesses?