Business failure is real! Therefore, you need to know what to do to prevent it. One of such efforts is to plan. Failing to plan is planning to fail, as many experts state. But this is not the only reason why a business failed. Entrepreneurs may not be resilient when the business is in crisis. As a result, they may decide to shut down. This article discussed seven (7) ways to prevent business failures.
1. Have a business plan
One of the best ways to avoid business failure is to have a business plan. This includes a statement of goals and objectives, mission and vision, a study of the business environment using PESTEL analysis, a financial budget, a forecast among other things.
Developing a business plan serves as a blueprint or road map for the company. It provides the direction for businesses to succeed as they face the real world. The entrepreneur will know what to start with and the future activities to be performed to achieve his/her goals.
2. Keep financial records
Another way to prevent business failure is to keep financial records. Doing so will help entities to track how their funds are used. Money is an important aspect of an organization. Therefore, keeping the records of how it is spent is necessary for business survival.
Record keeping of financial information will aid in comparing the budget and forecast in the business plan to know if the company is realizing its targets and objectives. More so, future plans can be made from the records.
3. Put control in place
Control is important in every business. Control and monitoring of funds so that employees will not act funny in their use of company funds. While it is not wrong to build trust with the company's people and talents, it is important to ensure appropriate controls are in place.
Aside from preventing loss of funds, control and monitoring can help reduce risks. Business risks abound and some employees may want to take more risks to earn more. Control means setting policies that guide how business activities are done.
4. Have a profile of customers and competitors
When starting out, you need customers to buy your products and services. Having a list or profile of people who you can meet to patronize you can help you start earning some revenue. A billionaire business owner once said that when his company launched its first product publicly, no one bought from them. But today they are a multi-billion-dollar company.
Competitors’ profile is another aspect that should not be neglected. It is always best to be close to your competitors. So, when they make changes you too can replicate. And where they are not performing well, you can utilize those areas as your business strength.
5. Decide on a suitable pricing strategy
Pricing is another area to consider. A strategic clock can be used to decide on what pricing to adopt. Unless you are selling a low-quality product, your product price should cover all direct costs and expenses.
Therefore, you will need to cost your product to know the actual price for it rather than simply using the pricing of competitors. Some companies build differentiated products or services. Then they visualised perceived benefits to their actual and potential customers to display the uniqueness of their company.
6. Be dynamic in all aspects
Businesses face ups and downs. To ensure continuity entrepreneurs have to be dynamic. Always changing as the business environment changes. Therefore, the company needs to have staff who are willing to learn new skills and knowledge that are needed to thrive.
7. Possess resilience
Yes, soft skills are important in business. But character shouldn't be joked with. Resilience is one characteristic every entrepreneur should have. Of course, a setback will occur, but instead of shutting down the business due to the setback, possess the character of resilience. Fight back to keep the business going till it is back on its feet.
A good example of when to show resilience in your business is when important machinery is not working properly and there are little or no funds to replace it. This will affect profit and cash flow. However, only resilient entrepreneurs can come out of it successfully.
Post a Comment