Steps to Saving Your Small Business
Yes...You can avoid small business failure by looking at your business with a strategic and systematic eye.
The rate of small business failure is astounding.
Small business failure is much more common than small business success.
- In fact, one in five business startups fail.
So...what is it that you can do to insulate your efforts from the rate of small business failure.
What can you do to avoid your business becoming one of the statistics?
- Well here's a start.
- Insulate yourself from small business failure by following the nine essential steps detailed below.
Step One. Know that it all starts with passion.
Most small business operators started with a personal strength or passion and have become swamped under the numerous competing demands that have almost nothing to do with that passion.
- Sit down with yourself and some paper and review your situation - assess your strengths AND your weaknesses.
- For example, if you are a great chef and have turned into a slave to paperwork, rethink.
- Maybe you should find an employee or partner that has the exact opposite strengths and interests.
- Find someone who loves the other side of the business that is killing the passion for you.
Step Two. Protect yourself from small business failure by setting up your new small business to win.
Prepare a business plan for your business.
- Now that you are already underway, you probably have a MUCH better idea of the answers to many of the questions it takes to build a solid plan.
- So, don't tarry.
- Head to your local library or bookstor and find a book on how to create a business plan.
Step Three. Recognize that small business failure decreases with having a realistic understand of the actual profit and loss figures.
- Inadequate capital and income are the most common causes for the rate of small business failure.
- Remember, if you can't make a profit on paper, you'll never make one that way in reality.
- So evaluate your plan for profit...and if there is not enough profit proof, tweak the plan to make your business more profit-driven.
Step Four. Start making changes BEFORE you start to ruin your credit.
It is almost impossible to turn around a business in financial crisis by cutting expenses alone.
- Add up your debts and prioritize.
- Then begin to make regular small payments to document your good faith and consistency.
Step Five. Reduce your chances of small business failure by maintaining a solid relationship with your suppliers.
Your suppliers don't want you to fail.
- Talk to them.
- Seek better terms of payment from your three largest suppliers.
- These better terms are as valuable as a cash loan in some cases.
- Ask for reduced minimum quantities of purchases in exchange for bundling several kinds of items from a single supplier.
Step Six. Strengthen relationships with your top ten customers.
- Pamper them.
- Ask them what you should add to meet their wants and needs.
- Get personal referrals to similar, large, quick-paying customers.
- They will carry your business through the hard times.
Step Seven. Identify the ten smallest and noisiest customers.
- The basic rule of business is that 80 percent of your income comes from 20 percent of your customers AND 80 percent of your grief comes a different 20 percent of your customers.
- Limit your contact with that 20 percent by offering them pre-paid automated sales.
Step Eight. Don't steal from the IRS, state, or your employees!!
Tax deposits, worker's compensation payments, and payroll taxes must be your number one priority.
- This is one of the few things that can actually get you in criminal trouble.
- It could last far beyond the life of your business.
- It is so easy to prove this type of theft that people rarely avoid huge fines or jail for long.
- If you really can't survive without this money the close the business today!
- No business is worth going to jail for.
Step Nine: Turning around a business can happen in numerous ways, but you must be creative.
Remember...half a loaf is better than none.
- So you may find a creative solution by looking toward your competitors as potential partners.
- They may need someone active in your region or territory.
- You may still be able to maintain a degree of independence as you run your own territory and eliminate your competition at the same time.
- Talk to your banker and equipment suppliers.
- If you have cash flow, but need capital equipment to serve your customers, the bank may be able to set up an equipment lease or loan.
The Bottom-Line: You insulate yourself from being just another small business failure statistic by taking proactive steps to steer your business away from failure.
- Evaluate your business with a systematic eye on what you can do to avoid small business failure.
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