According to the US Small Business Association 2/3 small businesses are out of business within 2 years and from those remaining only 44% survive the next 2! This is a dire statistic for those considering starting their own company and perhaps a necessary reminder to the uninitiated or uncommitted.
In some cases and for some people betting your entire investment on one hand of cards might statistically give you a better chance of getting ahead. But, you’re not going to make the same mistakes that the majority of small business owners make, are you?
What are those mistakes?
And what are the keys that give the top 14% who make it the winning edge?
Mistakes to Avoid
While there are a number of mistakes that can cost you your business some are easier to avoid than others. Natural disasters and, to some degree, economic factors may be beyond your ability to avoid and apart from insurance there may be no point in preparing contingency plans for them. So what are the pitfalls that you can avoid?
Lack of vision, goals and planning
The essential building blocks for your business must be a vision or mission and an accompanying set of goals and plans. Plan your work, then work your plan is a popular saying amongst successful business managers. These winning leaders know that prior consideration of the business and its environment is the key to future success. This doesn’t have to be complex or even detailed to be successful. You could have a living, flexible plan that allows for your personal preference and style. This is okay, provided something is prepared before you start out and written down so that you can refer to it and measure progress and actions against it. Then schedule regular reviews of your goals and actual performance.
Insufficient cash flow
Without cash your business will grind to a crashing halt overnight and you’ll find yourself and your business on the wrong side of the statistics and in the back of the unemployment queue. You simply must have money. That is not to say that making a profit is necessary, particularly in the first few years as your business establishes itself, but the cash to meet monthly expenses is vital. Failing here is probably an extension of a failure in your planning and review (see above), but equally it could be a result of simply failing to collect the money owed to you or to be too lenient on customers or staff (fraud is a very big problem – plan for it!)
Expanding too slowly
The market is a massive place today, particularly with the simplicity of the internet. Businesses are competing not only with local rivals, but also with interstate and overseas companies big and small and with family run or home based business using auction sites like eBay to sell items at prices that the average ‘bricks-and-mortar’ business with large overheads could profit from. Margins are very small in this environment and so the key to success is now expansion. You will stand a much better chance of winning the war if you have troops on the ground in a number of places (so to speak). Consider franchising if you are not comfortable taking on a number of offices or stores or get good advice and mentoring from someone who has done it before. It’s really necessary, despite the complexity involved.
Insufficient/inappropriate investment
Do you own your own business? Chances are that if you are still small you have put most of the funds in yourself. What should you invest it in to get the most value for those precious dollars? Certainly you’ll need plant and equipment to get you going, but don’t be afraid to invest in quality technology and in training and promotion as well. We are living in a vastly different age now than ever before. Technology is at the forefront of global commerce and you need to be hooked into it just to survive. Of course there is no need to go overboard, but you simply must be mobile, fast and able to store and process data quickly and accurately. Training and promotion are likewise necessary for your staff and opportunity to drive and navigate the information superhighway successfully.
Poor business and/or management skills
Chances are that you are not good at everything (even if, like me, you like to think that you are). You may be a whiz at technology, or great with people, or have a nose for a deal or the head for negotiation. Whatever your skill set is you should work to your strengths and try to develop your weaknesses, but while in time you may improve in some of those, you may not do it quick enough to save your business from the 85% destined to failure. Get people on board that complement your strengths and you’ll find yourself in a much better position to guide your company forward successfully and really listen to what those who know better than you have to say!
Keys to Success
If you can avoid the mistakes listed above you have half the battle won. Now, take no prisoners. Pump up your attitude and get your mind around the idea that you are going to be one of the successful ones. This can take some practice and mental conditioning coaches, positive friends and family members and mentors are going to help you get yourself thinking better if you make it a habit to consult with them. Arm yourself with motivation and with people that will remind you why you are in business and what you want to get done. Get in contact with mentors or take on partners who can guide you and a team that will support you.
Being a small business owner is a difficult road and one that will require not only iron-clad commitment and unshakable determination, but great sacrifice, often of personal and family money and time. Be sure to be appreciative of any people who you love who have to give up something they value to support your ambitions. Keep your health up and eat well, don’t skip meals or exercise and get some refreshment in the form of entertainment or recreation now and again so that you can keep at it for the long run.
Oh, and keep your eye out for a little bit of good old fashioned luck!
With these things in mind you are in a position to be able to make it, and remember that despite the grim statistics many, many businesses do. Yours will be one of them and you will be able to achieve your dreams and ambitions if you stay true.
And stay out of casinos!
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Help answer the question about business management
What can someone do with an associate degree in Business Management?I see my college offers an associate's degree in Business Management and I was considering it, but I'm not sure what positions that would qualify me for. Any ideas of job & salary? Ty!
Really? I thought educated people had class, and answered other people's questions graciously, without being rude or sarcastic. But now that I think about it, you never promised you were classy or educated.
Small busiensses tend to run out of cash fast. So you really want to keep track of your cash flow. Also look at if you have too much A/R. Will you be able to pay your A/P. How long does it take for your inventory to turn. If you run out of cash, where can you get credit. Good accounting can help you keep an eye on these issues to mange your business.
Hard Work, thorough knowledge, Luck and sincerity to you business.
:- ))
Sounds quite easy compared to a 3 year Business diploma, which is what I'm in.
conatct heidi fliess, i think she is out of jail
Thank you so much i wish i had seen your video’s way earlier thank you.
You are god! You explained it in 6 minutes what my lecturer couldn’t in a whole semester! You are my quickfire exams cheat sheet!
u did some great job dude! its so clear to me now!
wow!!! superb!!!
AMAZING lesson you are so good at explaining.
thank you, great lecture
Because she has a lot more to risk. If the business fails, who loses more? The person that invested the cash into the business…right? If the business strives, you guys wouldn't be in the position you are in right now without the cash investor. 28% is a lot more than reasonable for her share.
I NEVER leave feedback on youtube videos, even the ones I watch for entertainment. You have a gift period; Thanks you so much! Haha my teacher called our class “f$ucking idiots” today, and I must say that i do not feel like one anymore ; )
Women, very tough for us guys to figure out, I agree. They are wonderful creatures so much better than us men! I still have trouble figuring out my wife and mother, however, marketing to women should not be that difficult if you use your wits.
Ask yourself these questions:
1.) What are my top competitors?
2.) Who among the competitors is selling the most?
3.) What are they doing that I am not?
It is pretty basic stuff. If you are selling lingere, I would bet that Victoria's secret knows a bit about how to sell this to women (and men!) so go to their web site and see what they are doing and emulate.
If you are selling creams and other beauty products have a look in on Este Lauder, The Body Shop etc. as they know how to sell to women.
Take their ideas for your own and modify them for testing. They have spent a fortune on marketing speicialists to design their campaings – - follow the herd and you should arrive at the watering hole before you know it.
Ok, I'm going to try to explain this as I understand it. From what it sounds like to me, You hire people to sell your goods to stores.
In that case you are NOT a retailer. You would be a WHOLESALER or A DISTRIBUTER. It's very important to make these distinctions and to know where you fall in the chain of a line of sales. The people that you are hiring to sell your products are called SALES REPRESENTATIVES or SALES REPS for short.
From what you have written it is my understanding that you do NOT have a boutique of your own, right? What you are trying to do is get your product into UPSCALE boutiques and stores, true? OK.
Here are your options.
1) You CAN hire REPS to beat the streets and TRY to get in to see the BUYER at the stores, but generally you will have to go thru a "corporate" office at any "chain" store like Sephora. It's not always true, some of these stores do have their own buyers in-store and they are allowed to choose their own products. At smaller boutiques, you can walk-in; that's called a "cold call" and try to sell your product.
For the kind of sales I have described above you need to advertise in the newspapers or trade mags for "experienced comissioned sales reps". In the ad put down the requirements that they have maybe 5 years of selling exp in bath and body products. Don't worry. You'll get calls. When they come in find out either thru a written application or by interview what they have been getting paid. That old question on the application "required salary" is there for a reason. Of course you will pay them on a comission. It's probably around 15%-20% but that's probably after they have proven themselves. But always ask.
Don't be afraid to just go into stores and ask at counters what the people get paid in their comissions. It might be helpful. Tell them what you are doing and ask them for help. They are usually pretty friendly and helpful.
2)Your second option is to look into Trade Shows. If you can afford it get a booth by yourself. If not try to find someone who wants to share their booth. You may have to attend one show as a customer the first time to meet other wholesalers. Then you may find someone who needs a partner to share their booth for the next trade show. Maybe someone whose products compliment yours, but do not compete with yours. Like a line of Bed linens. If you can show your products at a show, you can get orders AND you can meet people who are willing to Rep your products. There are always Reps at these shows looking for new lines to "rep". You can put the word out at the show too that you are looking for reps.
I looked this up for you on Google by searching Bath and Body Trade Shows. Good Luck Honey. Trade Shows are a blast. give it a whirl if you can afford it.
Since it sounds like you are still going to school, why not start a simple online business and get some experience in your spare time.
Excellent video. Can you do one on empirical demand function ?
Here's a few off the top of my head…
Factors contributing to success-
-Sound business idea
-Skills in both making and selling the product/delivering the service and running a business
-Competent staff
-Good cashflow management
-Management of inventory, debtors and creditors
-Able to adapt and change, making use of new technologies
-Good people management and client relationship management
-Good marketing plan
Factors contributing to failures-
-Failure to adapt to changing times
-Lack of business acumen
-Lack of cashflow management
-Lack of competent staff
-Poor controls within the business
-Not collecting payment on time, tying money up in inventory
-Not targeting the right market
-Poor cost control
-Poor people management
can you use blue chalk in more of your videos i like it. thanks!