How to Increase Profit and Save Your Business.
Over 70% of startups fail in the first year. For a young person who has just stepped into the business world; it’s so disheartening.
I have closed four ventures so far, all of them in different towns and for different reasons. I look back and see the mistakes I made for each of them and appreciate that I learnt a lot in the process.
The first mistake I did was to assume that friends and family will definitely walk with me and support me. It was so painful to learn that some of them actually caused my downfall.
That’s why I decided to start Money Making Journeys. To enlighten and support business people who are making efforts daily to succeed.
If you are reading this, we want you to succeed and stay at the top. Here are a few things you can do to sustain your business during stormy seasons.
- Observe Discipline
This has to be my first point. People hate this term; some relate it to their childhood or school memories. The act of denying yourself for future good is loathed by many yet it’s a necessity.
It’s unfortunate that some of us are so used to overspending that we even use our business income for impulse purposes. It’s wrong. This will bring you down faster that debts would.
The first thing you need to ensure is to separate your business from yourself. Separate the banks accounts; let the business be its own entity. Have your budget and plans totally separated from your business such that you only use what your business pays you.
If it’s young and you are still investing in it, keep records. Let it pay you when it stabilizes but do not ‘eat’ your business to closure.
- Always Ask For A Down payment
You may be the kind species that give full service without even considering negotiating such that you discover the pay after you have delivered and sometimes so much later.
This is a high risk. If the people you are supplying to or working for decide to swindle you, you will lose your time, your effort, your hard earned cash and even the motivation to go on.
A friend of mine lost millions in a bank that went down. The assumption is always the same. They can’t fail to pay. Why would they? The truth is, you don’t know their financial status. Ask for a prepayment and a full payment immediately after. This will keep you safe.
Let’s learn from online working platforms, most of them have an escrow account. A customer posts a payment as a commitment and they approve it after the work is done. That is the safest way to deal.
- Look For Buyers First Before Ordering
Most businesses close with a store full of merchandise. When we have capital, we tend to be very optimistic and we buy goods hoping we will sell them in a flash and get more. However, it’s not always the case. I once had to move towns with loads of dead stock. I ended up disposing almost at a loss to at least recover capital.
Assuming you are targeting an event, it can be quite tricky to determine exactly how much stock to have. Always do your research, find out the no. of people attending who would be interested in your product. Buy a realistic amount to avoid holding your capital in stock that is not moving so that you do not end up missing other opportunities.
- Move The Office To Your Back Yard Or To A Shared Office Space
Having an office in CBD is great, people have the overall belief that it’s a sign that your business is doing well. Partners may be passing by from time to time but chances are that 70% of your best deals were closed outside that office. Most probably; in a hotel over lunch or even over the phone.
Keeping an office requires you to pay electricity, telephone, and an assistant. Why would you want to keep it and you are struggling with expenses? You can move the furniture back home or to a shared space. You will be saving over 20% of your expenditure and concentrating on sustaining your business.
You may still need someone to assist with the errands and hence the need to maintain the assistant but it’s not always the case. How about a virtual assistant? Let’s see how this works in my next point.
- Get Virtual Assistants Instead Of A Full-Time Staff
The assistant you have in the office need a salary at the end of every month, whether they work or not, they require a medical cover, the require stationery and a good phone loaded with airtime. They must look presentable and also get leave days. Can you still afford that?
If no, the solution is to get a virtual assistant (that is with the assumption that you work from home).
Virtual assistants will help run the errands and you will pay per work done and not a monthly fee. You won’t need to care how they look or dress, or whether they work from their bedroom. As long as the task is done, you pay them and the day is done.
- Take calculated risks and borrow wisely
A good loan pays itself. For example, you take a loan to facilitate a Local Purchase Order, the loan you take should be paid by the amount you get and you remain with profit. If the payment will delay, make a first installment payment a part of the loan to avoid penalties.
Let your loan payment (Principal + Interest) be within your budget.
Do not take a loan with the hope that a miracle will happen and you get a tender? No. Get the tender first, and then borrow. If you are planning ahead of time, at-least make sure the money you get will be used for the same purpose and if not, it will be available to clear the loan and not misdirected to other purposes.
They say learning never ends. It’s true. I am learning something new each day. Maybe you can also teach us something. Please, share with us in the comment section. Let’s make this a classroom.
Let’s do this.
Your friend always;