According to Barlow Andrews starting your own business is very exciting and will be one of the biggest decisions you will ever make. Being your own boss, deciding on your company strategy and growth, can be an exciting time for you and potentially bring endless possibilities.
However, there are many firms out there that sadly don’t make it. There are heaps of struggles and hoops to jump through first and many come in the first 12 months, which see lots of small businesses struggle to make it past the first hurdle.
7 Tips To Prevent Your Business From Flat Lining
To help keep you on track to being a success, here are some top tips to prevent your business from flat lining:
1. Be Realistic
Most business case studies have shown that a small business doesn’t really start to make profit until it has been up and running for at least two years. This estimate isn’t one that many small businesses would think about (or even want to consider as the truth) since the whole point of starting up your own business is to make profit that will improve the business owner’s annual income.
It’s a good idea to have a good understanding of your set up costs so you can budget how much you can afford and where you can cut back within the first two years. Having an office base can be essential for many but if you can work from home for a while, it might be worth considering that until you can afford to purchase an office.
2. Putting Together A Business Plan
Writing a business plan is an important step and should be taken seriously from the start. Research your market, competitors, and your target demographic, all to help you start to make business decisions that will help you understand what you are working with and against and how you can target your potential clients best. Looking at your competitors will allow you to look at pricing models for your services and how much you can afford to spend.
3. Keep Borrowing To A Minimum When Possible…
Ideally, you will have your own investment put away for the business so that you have a money pot to dip into when you need to spend. Sometimes, business start-ups need additional income that they can’t afford to produce at the outset so will speak to their bank or a loan lender to get the additional cash for their business venture.
Be realistic in what you can afford to pay back each month if you need to get a loan. There will be monthly interest on top of this and so look at how long it will take you to pay back. Get a true understanding of what the loan is when you work out the interest and how this will impact you in making any profit. Is the loan essential for the business or can you scrape the money together without it? Research all options.
4. …But At The Same Time, Don’t Borrow Too Little
Don’t scrimp on everything. If a business loan is needed for when you start up, then take it – so long as you can afford to pay it back. A loan can really help you kick start your business (provided it is spent on what you actually need and results in bringing potential profit to the business long term). Look at creating a budget for the company on what you have and then see how the loan will help.
5. Don’t Be Shy And Charge What You Are Worth
Many people who start out rely on their current contacts to be their first clients. This reliance is great if you know they will be a regular customer, but make sure that you outline your costs from the outset, and charge exactly what you are worth and want to charge other new clients that come your way.
So many people try to offer deals at the beginning to their friends that result in the price sticking at that forever. It’s good to consider deals but make it fair to all so that you don’t disgruntle new customers who find out that other people are paying less.
Look at how much time things take you and ensure that it is profitable to you and that you aren’t selling yourself short. Ensure that if you are contracted to a certain amount of hours that you work those hours. Be realistic with how long things will take you. If you don’t, then you may find yourself working all the hours the day sends on a project that you are only charging half the amount of time for.
6. Make Sure You Get Paid
Discussing money can be a touchy subject, but something that business owners need to get savvy with and fast. If you are collecting payments, make sure that you keep on top of your invoices and chase the money that you are rightfully owed.
Sometimes, it is worthwhile spending a little extra and getting a professional involved in the process. This can take the payment chasing off your hands and put in the hands of someone who knows what they are doing (and can do it well).
7. Keep Personal And Business Spend Separate
So, the business is starting to bring money in and you can see a little bit of profit starting to form. Great, but make sure that this money keeps being invested back into the business. Using the business card for personal expenses can get messy and rather confusing. Not to mention, it’s easy to overspend the money that should be being used for your business.
On top of the usual budgeting and research, it is important that a small business owner stays optimistic, realistic, and positive, even though some of the most difficult times. Starting a business can be a huge challenge that can often see many people struggle to keep positive about when the money isn’t flowing in. Keep revisiting the business plan and keep on top of the money and stay focused on what you are trying to achieve.
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