Top Reasons Why Businesses Fail
Contributed by AFFLINK
According to Investopedia, there are a few main reasons why businesses fail in the United States. A few of those reasons are:
• Cash flow problems and running out of money.
• Missing the mark when pricing products or services.
• Inexperience managing a business.
• Poorly planned or executed marketing campaigns.
To help owners navigate around these pitfalls, AFFLINK provides a few recommendations independent businesses owners can use to survive and thrive.
Create a budget. It's essential to create a budget, but more than that, make it a conservative, “lean and mean” budget. A lean and mean budget means staying frugal, saving a portion of each month’s profits, and accepting that tough times could be right around the corner.
Guard your credit. Someone once said, “You can only get a loan when you don’t need one.” When it comes to credit today, everything is in real-time. When you don’t need one or when you do need one, remember always to protect your business credit. You’ll find the bank doors open wide when you do.
Manage your inventory carefully. For jan/san distributors, their inventory is their biggest business asset and their biggest business cost. Monitor and manage your inventory carefully, return unsold products, if possible (even if at a discount), use a computerized inventory management system, order items as needed, and try to predict demand.
Expect slowdowns. As mentioned earlier, tough times and slowdowns happen; the issue is whether you’ll have enough cash to weather the storm. Just recently, one of the largest trucking companies went into bankruptcy because they ran out of cash. Independent business owners should have at least six months of cash on hand to get through slowdowns.
Hire a sharp accountant. Many small business owners use software programs to do their taxes. These programs can do an excellent job, but they cannot advise you. A competent accountant gets to know your business and how it operates. View them as your business partner.
“Finally, owners in the jan/san space should get involved with a network of other industry owners,” says Michael Wilson, president and CEO of AFFLINK. “In a network, independent owners have opportunities to learn from each other and can take advantage of many training programs that keep independent businesses going strong.”