Starting a business and becoming successful is often part of the American Dream. But there is a difference between starting a business and building a successful business. Many businesses fail within the first few years of existence due to the lack of planning for the long-term. There is not enough vision and there is not enough done to strengthen the business properly from the ground up.
If you want to start a business there is an easy way to get a better understanding of why some businesses fail and others don’t. When starting a business think about it similar to building a house. If done right it is protecting you against any kind of storm or danger of the outside world and will last for a long time. It offers shelter and protection. For you and your business that could be translated to that you want to have a business that is able to weather economical ups and downs (=storm) and that will provide income to pay the bills (shelter and protection).
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The best advertising, whether for a small business or large, is advertising that works. The price a small business owner pays for advertising would not be an issue if the outcome of the ad was known.
If a small business owner had a choice of paying $1000 a month for advertising that brought in a guarantee of at least $2000 a month profit, or paying $500 a month for advertising that brought in $750 worth of profit a month, there would be no hesitation. That savvy small business owner would gladly shell out $1000 each month for the advertising.
Small business advertising has no such guarantees however. It’s not like buying a refrigerator that is guaranteed to keep the milk and eggs cold. $1000 of advertising might bring $8000 of profit, or it might bring in zero. So, what’s a small business owner to do, especially if faced with a limited budget?
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Last week I made an early morning trip to a seminar/book promo breakfast to promote my web site. After putting out flyers all over the place I took a moment to step in to the facility and caught a few moments of a morning with Jack Welch, the former CEO of GE.
As I stepped through the door, a question and answer session was in progress. A woman stepped up to the microphone and asked “Is the customer always right?”
Jack smiled and said, “You might not think so, and they may believe so, but if you don’t make it so, you’re dead!”
Jack, that is a pretty strong consequence. Dead. But let’s face it. Who will come to do business with you again after you argue with them about their dissatisfaction? I think most people will just go somewhere else.
Isn’t is just common sense that we let our customer complain and then make it right? Well for the business owner, we usually just grin and say ” what would it take to make you happy today?” but what about our employees?
If we have not taken the time to train our employees how to deal with an unhappy customer, how will they react when one attacks them with ” the food was cold and tasted like crap!” or “I only had it for three days and the wheel fell off!”
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You’ve heard it a million times – cash flow can make or break a business. Lack of cash flow planning is the reason why many businesses fail. In fact, many PROFITABLE businesses fail because of cash flow issues. Without adequate cash flow, you can’t pay your bills and you can’t make plans for your business.
So… what is cash flow planning? Cash flow planning is projecting your future cash inflows from sales, services, and loans, and comparing them to your future cash flow needs (suppliers, salaries/wages, loan payments, taxes, etc.). The difference between the two is your net cash flow.
Why is cash flow planning so important? Cash flow planning can help you identify problems down the road, and fix them before they occur. Cash flow planning can also help you make decisions such as should I attend that conference I’ve wanted to attend, should I buy the new computer I’ve been wanting, or do I need to work extra hard this month to avoid a cash flow deficiency next month?
The first step in planning your cash flow is knowing where you spend your money! Solo entrepreneurs need to have a good grip on both their personal and business spending, as most solo entrepreneurs rely on their business income to meet personal finance goals (i.e., pay the bills!). So, you should track both your personal and your business spending, although I recommend that you keep them separate (that’s a topic all by itself).
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