Ever met anyone who did not want to own their own business? Imagine giving all the orders and setting all of the rules. Seems like a lot of fun, but owning your business is much more than that. In most cases it means dealing with a very tight budget, following and abiding by an exhausting amount of state and federal regulations, learning how to approach and customer complaints and much more. Doesn’t sound so glamorous now, does it?
As a New Business Owner Will You Be Around in a Year?
Every year thousands, if not millions of entrepreneurs will have their dreams come true. They will walk into a building that is owned by them and they will feel as if they are on top of the world. This is great, however statistics show that of these new businesses will not last past one year. Only one-third of all new businesses will remain open and flourishing past ten years. Reasons Why Many New Businesses Fail Disheartening? Yes, very disheartening, but mostly because many of these failures could have been avoided. With a little more planning and studying, the entrepreneur could have avoided many of the pitfalls. In some cases the businesses owners could have simply waited a few more years to open to make sure they do not run out of money, just a little more planning would saved them.
Here are a few reasons why many businesses fail:
a. Bad location
b. Poor inventory management
c. Working with the wrong people
Would you jump up and purchase a home with just anyone? Of course not. Or would you purchase a vehicle without even test driving it? The answer is, No. So, when it comes to choosing business partners the same seriousness and thoroughness applies. Your business partners must be people you can trust. People that are motivated and in it for the long haul. When it comes to inventory, keep detailed records of everything that is bought and sold, even if it seems minor. You’re be glad you did in the end. As for the location, ask yourself,’Is this a place that I will drive to?’ If the answer is no, than why would expect anyone else to?
Cash Flow Issues Can Become a Crisis For Many Businesses
What is a cash flow? A cash flow crisis is when not enough money is coming into the company. There’s a good amount being taken out of the company, but not enough is coming into the company via sells etc. Cash flow problems for many new businesses a cash flow crisis can actually force your business to shut its doors, even though a good amount of sales are coming in. One way to avoid cash flow issues is to take a closer look at the different ways a customer can pay. Sometimes if paying a bill if a nuisance, the customer will procrastinate and delay in paying it. Secondly, look over your invoices, is there a way that your company can send out it’s invoices earlier. And lastly, inquire about applying a partial payment of the item/service when it comes to your new customers.
First Year Business Concerns
Typically, once a new company has made it past the first year of their launching, it’s pretty much uphill from their. The first year of a new business is detrimental The first year of the businesses is always the most vulnerable. The owner is going through the snags when it comes to all of the incorrect determinations, such as traffic, finances etc. Pretty much anything that a business will go through, will be gone through in that first year.
Be sure that as a new company, your business is adhering to all rules of the state. The owner will need to apply for an application for authority. This form will give the company permission to operate in a particular state. Also, keep on top of employee wages, treatment, hiring and discrimination etc. There are many laws which apply to business practices. As a new small business owner, find out which laws effect you and your company directly.
Beyond the first year, the business can concentrate on being more stable. Set up among your employees, exactly how to handle frustrated customers. Let them know that happy customers are he reason they stayed in business that past year. Focus on inventory and make sure there is enough of it on hand, but not too much that you are not selling it fast enough, obviously this should have been taught during your first year. And lastly, relax. You did it!
