New or existing businesses, statistics show that only 1 in 5 businesses exist after 5 years. Why is it so? Why do most of the businesses fail? Could anyone have foreseen the warning signs of failure? Yes, but many ignore the obvious signs of warning, which puts the business on the road to failure.
Here are 4 important ways of avoiding business failure.
Keep Sufficient Working Capital
Insufficient working capital as well as overestimation of incoming revenue can lead to business failure. Don’t think all is well with the business and underestimate the need for working capital. Determine how much money it requires to stay in business, make it the number one priority. Also make sure of enough funds to cover all costs until sales takes precedence and can pay for those costs.
It needs experts to manage people, funds, operations, human resources, sales and services. Business is not an easy game. Many entrepreneurs lack expertise in these areas. They need to assess and analyze their strengths and weakness and seek help. Failure to do so impacts their business adversely. Also, entrepreneurs should be proactive. They need to remain constantly updated regarding the market, pricing, and competitors. They need to analyze, plan, and control day to day operations. Entrepreneurs have to create a work environment and culture that encourages high productivity. They should be able to hire, train, and retain competent people along with delegating important tasks among the team members. A good business leader should be a strategist with a vision, ready to make transitions and change.
Select People Carefully
Just don’t add people to the group, hire the right ones and that makes a difference to your team. Hiring people with positive attitude and high-octane energy can be infectious; it spreads to the others as well.
Face Things Upfront
Try and identify mistakes. Once the mistakes are identified, analyze them, plan, and induct a new approach to counter its adverse affect. See if it works. Once it is corrected, learn from it, apply it, and never repeat.
Remember: If mistakes pile up, it becomes very difficult to counter its effects. Save your business.