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Saturday, 10 April 2021 21:24

The Four Business Killers For New Entrepreneurs

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yes noIf you have started a new business and are looking for it to grow and become a multi-million dollar brand, you have to follow some bits of advice. Here are 4 tips to keep your business from falling.

1. Too Much Overhead

This is the number one mistake entrepreneurs make when starting out. You buy too much. I know that you want the best brand-name furniture and the top designs, the best systems, the best tools, etc. However, we must crawl before we walk. You should be focused on surviving your first year in business.

When you are budgeting for your business, start with the bare necessities that you need to open and get the other equipment as those needs arise. When looking for space, find an option that is as move-in ready as possible. This keeps you from spending money that you can keep in your pocket. Remember, you haven’t made any money and you are not profitable until you have paid off all of your startup expenses, as well as your monthly expenses. Personally, I would go a step further and have six months of monthly business and personal expenses saved.

Tip: Build a client base with as little overhead as possible. Purchase used equipment or share your space with another business. Keep it lean so that you can have a positive cash flow.

2. Limited Cash Flow

A common reason why new businesses close their doors is because they don’t have enough money. Starting a business can cost anywhere from $45,000 to $90,000 or more. Cash flow is crucial to any business startup. You must budget and penny-pinch by only buying what you need. Avoid making large cash purchases and use other financing options like leasing so that you can have cash in your bank account. You need to keep your doors open long enough to create a steady flow of paying clients.

Tip: Pay yourself a lean wage until you build up your capital.

3. Too Much Planning

An awesome teacher once told me to stop sweating the small stuff and all things are small. Stop overwhelming yourself with all the little details because there will always be little details. This is classic “paralysis by analysis.” We are not psychic so we can’t foresee all the things that could possibly happen when starting a business. Don’t worry.

Here are three steps to get started:

  •  Have the minimum of what you need to open (inventory, computer, etc.).
  •  Be compliant with all of your requirements and regulations (federal, state, local) to get the business established and your professional licensure (if applicable).
  •  Set a date and open.

Tip: It is better to get started and not be perfect than to never start at all. This is called imperfect execution.

4. Too Little Planning

I know this is the total opposite end of the spectrum; however, not planning enough will cause you to struggle in your business as well. You need to have a business plan so that you have systems in place and know how you are going to do everything from getting clients in the door to establishing protocols and procedures, credentialing and dealing with employees. You must know how this is structured before you open the doors.

Tip: Start your business plan first and follow it. Remember, it is a dynamic document, which means it is always changing.

 

Read 217 times Last modified on Sunday, 11 April 2021 06:12