Business Survival Tips
Congratulations on becoming a business owner and getting your first business up and running.
The reality of going into business is about surviving the first, second and third year, but more importantly gaining a level of profit that makes the business sustainable and worth owning. The graph shows the current Australian Business Survival Rate from the Australian Bureau of Statistics (http://www.abs.gov.au/ausstats/abs@.nsf/mf/8165.0)
Businesses that use external advisors and business Intelligence are more likely to be faster innovators, gain a competitive advantage and become more profitable and sustainable over the long term.
The Yellow Survival Rate (Assisted) are businesses that took onboard the 5 Actions below.
Actions That Will Make Your New Business Succeed.
There are several reasons why small businesses don’t survive and it's not normally contributed by global or local economic trends. Here are five top reasons why and what action you can take:-
Lack of Experience & Business Intelligence. This one reason is most prevalent in the first year of operation. Coupled with poor planning and mediocre business analysis, business owners with lack of experience are unlikely to succeed. The situation is even worse if your business is under capitalised and the owner has put everything on the line. The result is everything will go under, business, home and even relationships. Action: Adopt a continuous learning strategy. Attend business programs, build a network of friends / advisors that you can learn from and ask questions.
Poor Visibility and Access. This is the death of any small business that depends on walk by traffic. Small businesses that are not located in high traffic or populated areas like malls or city centres have a higher chance of declaring bankruptcy than those that have higher visibility. Being visible is so important and not just with a shopfront as shoppers are heading to the internet to buy goods and services. Action: Research locations and methods of improving your visibility to customers and creating the change.
Poor Financial Control. Around one third of businesses fail due to poor financial control. Not knowing the operational cost, using a strategy of being the cheapest, mishandling of finance and poor credit arrangements will all trigger monetary difficulties. The tell-tail-signs occur when sales are lower than anticipated or unplanned / unexpected bills are due. Action: Understand how money moves in your business, read financial reports, cost products / services and plan / monitor cash flow.
Ineffective Strategic Management. As business revenue grows, businesses are then at greater risk of poor strategic management. Not having systems in place to grow the business with control is the sign of the "Here one day, gone the next!" Having a business plan in place is important but also as a business grows with extra employees, contractors and clients, having business systems and procedures in place to managing risk, people and processes. Action: Learn how to establish, create business systems, educate and automate.
Look Out and Back. Businesses fail because they don't look outside and review the business based on external changes. Businesses need to identify and understand external conditions and to devise appropriate strategies to combat those unfavourable threats or secure opportunities when they appear. Business owners need to take time out to review their current position. Action: A regular meeting with a business advisor, coach or mentor can help with financial review and to create focus to achieve short and long term goals.
Remember, it is just a matter of understanding your industry and adapting to change no matter what the circumstances may be.