How to lower the chances of my business failing.
For a new business, the chances of failing during the establishing years of the business is very high. There are many reasons why a business can fail. While business failure is common, it does not have to mean that your business will fail also. There are steps you can implement which will mitigate the chances of your business failing.
1. Have a Business Plan.
It is surprisingly common for businesses to not have a business plan. Not having a business plan effectively means you are operating your business blind. A proper business plan includes sales and marketing strategies, but also plans to put in place if something happens in the future.
2. Be Engaged with Cash Flows.
The cash flow of your business is the blood of your business. A healthy cashflow is a sign that your business is doing well. Many businesses in the building & construction industry experience issues with cash flows.
The mistake that many business owners make when faced with a shortage of cash coming in, or an unforeseen increase in expenses, is to inject large amounts of capital into the business and hope the issue will resolve itself.
To mitigate the risk of your business bleeding out, be engaged with your cash flows and fundamentally understand the cause of the issue. See there is an unusual increase in an expense and put in place strategies to fix the problem.
3. Avoid Digging Yourself into a Debt Grave.
Borrowing some cash to secure expenses can be an easy way to fix the problems of your business in the very short-term. However, consider this: is the short-term gain worth the long-term strain.
Naturally, any debt you take will need to be repaid, and repaid with interest. Before jumping into an arrangement to cover a present shortfall, consider if the repayments for the life of the loan are going to deal a death blow in the long term.
You do not want to be in a position where all your revenue goes into paying off debt and not investing into your business.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice.