If 100 businesses launched tomorrow, how many do you think would still be around in ten years time? The answer, sadly, is four. Yes, you read that right, four. Clearly that’s cause for alarm, but before you get too depressed you need to consider that there are things you could and should do to ensure that yours isn’t one of them.
Firstly, you need to realize that money is crucial. Writing for Inc, Trepoint CEO Bill Carmody points out:
“Why do most businesses fail? Because they can’t pay their bills. When you run out of cash, it’s game over. None of your vendors/creditors care in the least how much profit you’re showing on your books if you can’t pay your bills. Companies don’t go out of business because they lack profits on their financial documents, they go out of business because they don’t manage their cash and can’t pay their bills.”
So, how do you ensure that you’re in control when it comes to money? Here’s some tried and tested expert advice to get you through the challenging world of business:
Low cost is king
Warren Buffett isn’t a bad judge of what works in business so it’s probably worth sitting up and taking notice of what he has to say. One of his ‘essential rules’ is to keep costs low and this is definitely something to abide by. You need to strive to deliver products and services at the lowest possible price – with no compromise on quality – to ensure that you don’t waste money. The lower your costs, the more likely you are to feel in control.
Use software properly
Money and paperwork go hand in hand – and a failure to keep on top of your books will easily see you lose control of your money. That’s where accounting software really comes into its own – making accurate record keeping as simple as possible. Tools can help with everything from tax to expenses and deposit slips. Use the wonders of modern technology to gain control.
Make use of free tools where possible
There’s no such thing as a free lunch but there is such a thing as free tools that you can use to market yourself. If you don’t shout about yourself, there’s little chance that anyone else will. Make sure you use your website, blogging and social media to promote yourself in a way that doesn’t break the bank. You don’t need to pay for a commercial at the Super Bowl to get your name out there.
Get help from successful people
There are plenty of people out there who have made a success of themselves – you need to learn from them. You can either pair up with a formal mentor – who you can turn to for guidance – or just hunt out influencers and read their columns, watch their TED Talks etc. Advice from the right people is worth its weight in gold and will certainly show in your accounts in the long run.
It’s also important to ‘know what success looks like’. Every business should judge itself against a series of key performance metrics and tracking these will pinpoint areas in which your business is or isn’t doing well. Spotting problems at the earliest possible stage will ensure that you can step in and sort them before they leave you with an even bigger headache. You need to understand the relationship between performance and financial output and take a proactive approach to fixing issues where they arise. Knowledge is power…and also the key to being in control.