24 May 10 Ways to Failure-Proof Business
Everyone who starts a business knows that it will be a risk. There will be chance to fail. It really helps that when you launch a business, you are armed for it. You should have the knowledge to run a successful business as well as the passion to survive every trial along the way—because there will be a lot of it. Knowledge will be your armor in keeping your business afloat. So arm yourself with these 10 tips to make your business as failure-proof as it possibly could.
1. Regularly offer something new in the business
If you are in the business of selling products, always diversify. There will always be products that are considered bestsellers that you need to continue selling. If at all possible, improve those products and keep them fresh. Notice how those shampoo products always have something new? Well, do the same with yours. But you don’t have to limit innovation with updating a product. You may also introduce new goods in the company. This will give the business a chance to attract new customers. Just make sure that your new product can seamlessly blend with your other products, lest, your business might develop an identity crisis.
When you are in the business of offering services, you could tie up some products to the service and sell them, too. You cannot just rely on your original products and services, and certainly not your old and loyal customers. If you want to the business to survive, you have to diversify your sources of revenue.
2. Be practical with all expenses
Spend the company’s money only on necessary things. That doesn’t mean you have to be unsparing when it comes to your employees—continue to supply coffee in the office because that will fuel employees to work. Don’t scrimp on the benefits, just be austere. You don’t need to supply the office with Starbucks coffee when there are cheaper brands that will work the same way. The same goes with office supplies; make sure you get the best value-for-money products. If at all possible, practice getting things through an X-Deal or exchange deal. This is the process of getting a “free product” in exchange for your product or service. This way, you don’t have to spend the company’s money.
3. Treat time the way you treat money
When it comes to business, treat every minute as an opportunity to make money. As a business owner, you have to be practical with time. Make every minute count; transform every minute to dollars. Don’t take that literally of course. It only means that you cannot waste time because as they say, time is money. You should avoid closing down the business because every day lost is also a day’s worth of profit lost. Say you just wake up one day and decide that since you’re feeling lazy, you might as well not open your business. Even if you don’t open the business for the customers, you are duty-bound to pay the salaries of your employees whether they work or not.
However, just because time is important in productivity doesn’t mean you should cut the lunch break of your employees. It is not about cutting time, but it is about spending time wisely. Your employees need a break and you should give them the appropriate amount of time to have a break or you will eventually lose them. Be practical with how you spend your time with the business. You can’t call for lengthy meetings because that will take people away from their regular tasks. If you do need to meet, just choose who you invite in the meeting. Allow those who attended the meeting to echo what was discussed, or distribute the minutes of the meeting to the rest of the employees—or at least those who need to know what was discussed. Regularly monitor the employees’ work and make sure they are not spending most of their work hours gossiping or chatting.
4. Be smart about taxes
There are many tax credits and deductions that a business can take advantage of. Keep every receipt that you have in relation to the business and take advantage of all the tax claims that is due to the business so you will pay the lowest amount of tax possible. You can ask for the help of a tax expert. Sure, it may cost the business some money but it will be worth it. Do not overpay your taxes even when you know that you will get a refund in the future. Also, make sure you pay your taxes on time. Penalty fees are unnecessary expenses that you should not be having.
5. Be ambitious and continue to be passionate
Always envision to make the business the biggest thing possible. Dream big and always strive to reach that dream. When you have that big goal right in front of you, you will work hard to achieve it. Never lose sight of that dream and when you do stumble, let passion be your driving force to get up and continue working hard for that dream.
Of course, be realistic. You can’t dream to rule the world, but you can dream of running a multi-million business. When you have that sight, identify smaller goals that will allow you to reach that dream. You have to learn how to crawl before you can work and eventually run. Always complement your dream with hard work. Consider your dream a destination. You can’t just look at it. You have to go to it—whether you crawl, walk, jog or run through it, it basically means the same thing, you have to do make an effort to reach that destination. However, if you run, you get to your destination way faster.
6. Continue to learn
In life, treat every single day as a learning experience. The same should be said of any business. You have to open yourself to learning new things. Just because you graduated with honors from a reputable business school doesn’t mean you are already an expert on everything. You can still learn from other people, you can learn from your employees, and you can learn from your daily experience of running the business. You can also continue to learn from the four walls of the classroom. Always strive for knowledge—too much knowledge has never killed anyone.
7. Be relevant
Most businesses nowadays have active social media accounts on all platforms. You don’t have to open an account for your business in all accounts but seek the most relevant social media platform for your business. Try to use your company’s social media platform and post content that are relevant to the current times. For example, during Christmas season, try to create Christmas contents even if it has nothing to do with the products and services you offer. Of course, your post should carry the logo of your company. It is even better if your content is directly related to what you are offering. Take advantage of the benefits of social media—it’s for free!
8. Regularly monitor and update books
Sloppy books could be the downfall of a business. Always update your books. This means that you have to study it daily because financial statements are recorded every day. Your business will have expenses every day, but it will also earn profits every day—well, hopefully that’s the case. So it is essential that you go over it regularly. One recording mistake in the book could affect how your financials look at the end of the month, or heaven forbid, at the end of the year. This indicates that you have not caught the mistake and it could potentially have a lasting effect on the business.
But how could the books affect the course of the business?
Your business’s financial records are organized in the books. This will tell you if the business is making money or not. Whether it is making money or not, the books will determine how you move forward with the business. Do you close it for not earning enough? Do you expand because it is earning more than enough? So do you now see the potential disaster that will ensue if the books are not giving you the real data just because of an error made from a while back? Sloppy recording could hurt the business.
It helps if you have a bookkeeper or accountant to do the books. This way, errors will be limited to between slim and none. These financial experts know what they are doing because it is their job. However, as a business owner, you need to be acquainted with the books as well. So even if you have an expert recording and maintaining the books, you need to understand the numbers inside the books. Know the details of your expenses as well as earnings. Keep track of every dollar spent and earned in the business.
9. Keep track of payables and receivables
Aside from regularly monitoring the books, you need to keep a schedule of your payables and receivables. Accounts payable is the money owed to creditors. If you are in the business of manufacturing goods, you have to pay your manufacturers and suppliers. If you are in the business of providing services, you have to pay for the suppliers of the materials you need to do business. Having a schedule of your accounts payable on paper will make it easier for you to study and understand your financials. It will also give you a proper picture of how your business is doing. It is also very important that you are on top of every dollar that will come out of your coffers.
On the other hand, you also have to keep a lid on your receivables. This is very important because this is also the money that you will need to keep the business running. Accounts receivable is the money that you will receive from clients for products served or services rendered. Be very rigorous in collecting your accounts receivable because this is the lifeline of your business.
Still on the issue of financial movements, you also need to be on top of your bills. Pay them on time or else you will be faced with unnecessary penalty fees. Make sure that more money will be coming into the business rather than going out. A penalty fee is something that could have been avoided so paying for it will be a waste of money.
10. Understand your COGS
COGS stands for costs of goods sold. This is the actual price of the product or service when you factor in materials, labor and other operational costs. As a business owner, you need to know the actual cost of your product or service so you can intelligently put a selling price on it. You can’t put a selling price on it based on the prices from competitors. If you do that, you may either price your goods or services too little or too much when it should just be right. You cannot sacrifice the price of your goods or services just to be competitive. If you price it too low, then your margins will be low as well. Of course, the goal is to keep COGS at the lowest possible point so that margins will be up even when you want to maintain a competitive price.
How do you keep COGS down? Take time to decide the suppliers you have to deal with. You need to identify what kind of suppliers you need and you need to evaluate possible candidates that will supply your needs. There are many factors that need to be considered when it comes to choosing suppliers. While you want your raw materials to be as cheap as possible, you can’t just choose a supplier based on price. You have to make sure that the quality of the raw materials is good. In fact, if at the end of it your price point will be a bit higher than your competitors, you should not worry as long as your quality is also better than the competitors by leaps and bounds. Customers are willing to pay more for higher-quality products or services. You also have to make sure that your supplier is reliable. Raw materials should be delivered on time to prevent delay in business.