common mistakes business owners make
Common mistakes business owners make
Many small business owners have a challenge drawing the line between their personal and business finances. Many withdraw money from the business account for private use without due process. I know a supermarket owner who used to serve his private visitors drinks meant for customers without paying for them from his pocket. In essence, the drinks were ‘on the house’. Of course his business did not last very long.
Another common mistake business owners make is not having savings for the business. The business is essentially living from hand to mouth. When profits come, the owner consumes it rather than transfer a portion to reserves and reinvest some. Businesses ought to have savings that can be invested in the money market for interest income. That becomes another source of income for the business.
There are some businesses that have a goal of growing this interest income to the level that it is enough to cover payroll. This means their ability to make payroll is not dependent on the business climate. When you get to this place, your focus is more on growth than survival. It is easy to point fingers at the government for depleting reserves resulting in the current recession.
What about your business? What is the size of its reserves? How diversified is your business income. If your main line of business is not doing well, how long can you last before going bankrupt?
UsiereUko is author of Practical Steps to Financial Freedom & Independence and can be reached at [email protected], www.financialfreedominspiration.com
Quote
“If you really look closely, most overnight successes took a long time.”
— Steve Jobs
Five tips for start-up success
You have the perfect home business idea. You can’t believe no one has thought of it before. Or, if someone has, he or she doesn’t have your vision, skills or passion. You are convinced this new business is the key to your successful future.
Now what? The best way to improve your odds of success is to move slowly and carefully in starting a business. Do so, and you can join the 70 percent of businesses that succeed in their first two years, according to the SBA.
Begin with a plan. Not all home businesses need an official business plan, but every home business owner must spend some time planning. Before you put out your shingle, sit down and determine how much money you need to invest (and in what), your goals (short- and long-term), your marketing plan and all those pesky details (For example, do you need a separate checking account?).
Find a mentor. You may know someone who has successfully created a home business and feel comfortable asking for advice. Seek help from other small businesses, vendors, professionals, government agencies, employees and trade associations. Be alert, ask questions, and learn everything you can.
Money in the bank. Don’t quit your day job just yet. For those of you considering the full-time freelance plunge- set up a savings account with enough funds to cover at least six months’ worth of bills. This will give you a buffer to help with your budget. While hunger might be a good motivator, it’s easier to work when you have electricity and your house isn’t being repossessed.
Keep competitive. Even if you think your business is unique, you need to conduct a competitive analysis in your market, including products, prices, promotions, advertising, distribution, quality and service. Also be aware of the outside influences that affect your business. Know what makes the difference between you and your competitors. Is it service, price or expertise? Whatever it is, capitalize on it.
All systems grow. Word of mouth is the best way to grow your business. Ask your satisfied clients for referrals, offer free consultations to new referrals, and consider a referral or finder’s fee. Get your name out to build your brand. Go to industry events-conferences, association meetings and seminars. Go to events in client industries; socialise, and always have your card ready. In addition, do some pro bono work for a charitable organization with industry links.
Culled from www.entrepreneur.com
