Anyone who has ever tried to set up their own business understands it’s an extremely hard challenge that they embark on.  I am certain you’re familiar with the fact that over 50% of small businesses go out of business in the first year & that 95% go out of business within the first 5 years.  However, that number doesn’t alter much each year.  Let’s explore this. 

Most businesses are launched because its owners have what they believe is a good concept.  But successful business ventures remain so because those who have the vision also understand how to implement it, have a reliable business background and are not afraid to engage experts who also have a solid business experience. 

Unfortunately, several awesome industry ideas fall short as their owners fail to understand the difficulties of running a new business and decline to seek timely assistance in areas that they may be weak in.

So many small business owners are exceedingly confident and often overestimate anticipated revenues and miscalculate what needs to be carried out in order to be successful. 

One common mistake that new business owners make is to never “let go” of several jobs that they are plainly not skilled to undertake and they assume that they will save money by refusing to ask for assistance. 

Don’t assume you would do it all. 

It is okay-and even smart to ask for help – whether that purely means getting a second opinion, or entirely outsourcing a function or activity that isn’t one of your core skills or processes.

Form filling and piles and piles of paperwork is becoming essential in today’s business world.  There are accounting and tax records to retain & sort; invoices to prepare and debts to collect; invoices to settle and so much more.  Unsurprisingly, all you want to do is concentrate on why you began your business in the first place – doing what you enjoy most and being compensated well for it. 

I know…all of this added effort is not your favourite aspect of running a business and may be be boring and tiresome.  However you must appreciate that it has to be performed eventually. 

You have two choices, you can bite the bullet and make sure you allot sufficient time to keep up with all of the ancillary paperwork, regulations, and accounting or you should hire professionals who make that their business to handle those mundane, however crucial, tasks for you. 

Then you can focus on the bits that you do best.  As a newbie, you’ll need to ensure you meet the obligations imposed on you by government tax departments, health and safety law, customer service and much more. 

As you begin to reflect on how you run your company, you will probably come across new things about it.  Varying how you view your company should shed new light and repeatedly provide you the help and answers you’ve been searching for.

You’ve already taken a huge plunge and began on the route to a totally new approach of carrying out business. Don’t end your quest now!

I challenge you to look closely at your company and employ the changes you need to see it succeed.  Extend the boundaries and limites of your imagination and don’t be afraid to try something new.

It’s a demanding economic environment at the moment for new and developing business ventures. But by cutting overheads and becoming firmer with service providers, new small businesses may flourish.

This commentary highlights half-a-dozen “tactics” for surviving in a downturn.

1. Accept that cash is crucial

Look after your money – if you’re out of cash and cannot access more credit, you’re probably theoretically broke and heading for ruin. The lack of money is what the majority of accountants recognise as being the primary killer in most business start ups which fail. I propose to my clients that they need a detailed 3 monthly cash forecast which isn’t taken from the income statement but from a thorough understanding of cash received and disbursements. Monitor trends in your cash position to be on top of any tough situations.

2. Collect the cash with obsession

Deal with accounts receivables routinely. Companies are hanging on to money longer than ever, resulting in overdue settlement. Those tardy settlements cause a knock-on consequence throughout the wider community. Money due will trend up, and several of your clients may turn out to be victims as well. Don’t continue giving credit.

3. Don’t depend on anyone

Keep a close eye on your service providers, and maintain other options. In a slump, a number of your suppliers may become in difficulty too, and you should think about other suppliers for your essential raw materials.

4. Assess your operating costs regularly

You might estimate expenses, you cannot project income. Search for ways to slash expenses. When economic times are good, businesses have a tendency to increase the number of employees and incur outgoings that are nice to have, but aren’t essential. It’s time to perform a clean peek at them.

Maintain a focus on core markets and expend money exclusively in those areas. Keep away from spending capital as well as time in areas which have been confirmed as less worthwhile. Many businesses start by slashing promotion & marketing expenses. This may be an error.

Instead of slashing these budgets, assess the processes you are using. Are there other cost effective ways to promote? Does your existing strategy deliver the proper outcomes? If not, revise the way you work to generate the greatest feasible outcomes.

5. Don’t ignore your lenders – talk!

If you have borrowed cash, stay in contact with the people you owe. Do not delay until it’s too late before talking to your lender. When you are already in a crisis and haven’t given them any notice, your position could become more complicated. Keep up frequent dialogue. It will aid you if you ever need to amend terms.

I work with several entrepreneurs who feel an enormous amount of strain lifted when we arrange improved terms with their lenders.

6. Returns – business ventures survive on the surpluses they generate

Don’t worry about increasing sales. Worry about growing surpluses. Make sure you comprehend what influences surpluses in the business. To stimulate demand, you may have to become imaginative with your product range, and you don’t want to put something out there that is actually unprofitable.

Consider branching out to seize the most of possible opportunities. Other people’s vulnerability and insecurity could work to your benefit. Who knows – you may identify another lucrative market.

The habits of successful business owners are a topic worthy of much discussion. Have you often wondered why some company heads earn significantly more than other successful business chiefs?

In this article, we will discuss 3 habits most highly successful business entrepreneurs employ on a daily basis.

1. Learn your business

One of the key elements present in the character of prosperous business heads is expertise. They are extremely knowledgeable about their business. While they may not do everything themselves, they know exactly what needs to be done in each component of their enterprise. This is essential because your employees will know that they can’t present you with inferior work and expect your satisfaction. If you are a new business entrepreneur, learn from reading books about your industry, going to seminars, and other business owners in your field.

2. Staff your shortcomings

As a small business owner, it is imperative that you staff your weaknesses. It is OK to be weak in certain areas. The danger arises when those weak parts of our business are left alone. These areas must be handled by someone. Employing individuals who are strong where we are not is a great way to deal with our inferiority. It is when we work together as a team that our businesses succeed and we can become a successful business entrepreneur in our own right.

3. Keep track of your marketing to become a successful business entrepreneur

Smart business owners will always know which marketing pieces are producing the best results. Knowing how much money your marketing is producing for your company is crucial. If a specific campaign is unproductive, you must be prepared to replace it or simply stop it entirely. If you are spending more on marketing than you are making in profits, your business will not be around for long.

To sum things up, the habits of small business owners who are successful are very similar. If you imitate the 3 characteristics above, you will begin to develop these character traits in your own life. You can be the next successful business owner in the nation by following the methods of others.

Words like “corporate responsibility” and “business conscience” have become quite the buzz of late.  Many people think that businesses have become too selfish and that, in their pursuit for profits, they should also give something back to society.  Now that all sounds good if you’re Bill Gates or Sir Richard Branson and can afford that level of generosity.  But what if you’re a small business owner just starting out?  How far should, or can, you go when it comes to being generous?

Many small businesses make the mistake of giving too much.  So much, in fact, that it ends up negatively affecting their bottom line.  In order not to let that happen, you need to have a healthy balance between profitable activities and generosity.  Here are some key mistakes that many small businesses make on a regular basis:

Free information.  Yes, it is important to provide people with information about your company, especially if you’re just starting out.  Therefore, many small businesses regularly send out tons and tons of free brochures or information packages about the products and services they offer.  But does the amount of business brought in by them more than offset their costs?  Instead of sending these types of materials out randomly, it might be a better idea to selectively send them out to people who have specifically asked for such information.

Free samples.  Consumers love receiving freebies such as product samples.  But product samples don’t always convert consumers into customers.  Handing out product samples can become quite expensive if it is not done strategically.  Only make them available to your best prospects.

Donations.  Charities will come knocking on your door to ask for donations at one point or another.  A certain amount of donations to charity are always tax deductible.  But you are not Oxfam and you need to limit your donations to a few selected charities.  Learn to say no once in a while.

Employee perks.  In a small business, especially if it’s a family business, the culture of paternalism is very strong and employee loyalty is highly valued.  Therefore, when times are good, business owners often reward the employees that have stuck with them by giving them huge pay raises and bonuses.  But what happens when times get tough and such employee perks are no longer sustainable?  What if sustaining them means your profitability will be in the red?  When rewarding employees, make sure that you have the ability to sustain those rewards even when business is slow.

When charitable acts start to eat away at your profits, they become bad business practiceA.  Be prudent with your generosity if you are still trying to get your business off the ground.  If you go out of business, you won’t be in a position to help anyone at all. So stop playing Santa, and focus on the profitability and sustainability of your business.

Small business owners who are looking to grow their business are often tempted by the idea of diversifying into other products or services.  However, a countless number of business ventures fail utterly when their owners decided to diversify away from the core of the original business.  Expanding into other product lines or services takes a large amount of time, effort, and resources.  

When a business doesn’t have enough of these to handle the expansion, you end up with a situation where both the new and old ventures suffer.  This is particularly the case for newly-established small businesses that have very limited resources to begin with. In the early stages of your small business, it is vital that you stay focused on your core business and its true strengths.  

In order to make the most out of your limited resources, you need to identify what it is that your business does best and concentrate on it.  Related and unrelated endeavours will distract away from what your business does best.  Your business may be involved in many things, but there has to be something that it does better than anything else.  

The Coca Cola Company, for example, produces a myriad of different drinks, but its main product is undeniably Coke.  If the company were to stop selling Coke, it wouldn’t survive.  So how do you get clear about what your core business is?  

You can start by asking yourself these questions: 

1. If you were forced to eliminate all of your products and services, and could only keep the one that is most crucial to the survival of your business, which one would it be? 

2. Why would a customer do business with you instead of a competitor?  What does he get from you that he can’t get from your competitor or anyone else? 

3. What one product or service is so important to your business that you would be willing to lose some customers for it? 

4. If your best customer had to deliver a 30-second speech about your company, what would he tell his audience? 

Answering these questions will help you to define what your core business is.  When you concentrate on your core business, you maximise the value you deliver to your customers by satisfying a critical need.  You also build-up your reputation and you’re identified with providing a certain product or service.  

Your customers will be attracted to you because they know with certainty that you will deliver what they need.  This is the best way to become a leader in your market.  So stick to the knitting, and focus on your core business!

If you are too proud to ask for help in your business, you are missing out on many valuable learning opportunities. Mentoring is an essential tool to utilise in business. Mentors, business associates, friends and family can all provide valuable insight to assist you in your business success. Mentoring is one of the best sources for quality information and business wisdom on an ongoing basis and is simple to arrange.

Choosing a mentor is an important decision. Start by searching for someone in your business field that is currently in the place where you would like your business to be. Ask for a small amount of their time on a weekly or monthly basis, either in person or via a teleconference. Mentors are generally business owners who have more experience than you, who have achieved a higher level of success and who can become a trusted advisor to you and your business; and, their time is often free.

As a business owner, you are generally on your own. No more bosses to ask advice from and often few employees to bounce your ideas off of. Every business owner needs to have a great sounding board and sometimes they need emotional support throughout their business journey. Read my article, Why it Pays to Have a Network of Advisors, for more information about choosing the best mentor.

Learning from the business mistakes that your mentor may have made may help you avoid those same mistakes while you are growing your business. A mentor’s perspective and past experiences will help you to propel forward quicker in your business strategy.

Business mentors can also offer you access to an extended social network, offering you and your business access to senior decision makers to help you along. People like to help other people, and mentoring is a primary way for successful business owners to give back to the business community.

Mentors provide you with a no pressure and no ulterior motive relationship. This level of openness fosters better communication and a comfortable learning environment. The establishment of trust is something that typically grows into a long term trusted business relationship.

Don’t be afraid or too proud to ask for help in business. Mentors are a tremendous resource for any business owner, at any stage and will help you go further than you would be able to go on your own. Seek out a mentor to begin moving your business forward.

Setting up effective terms and conditions can be a challenge for many small business owners when they are formulating their payment infrastructure. Extending credit can be an effective small business strategy as it allows your business to establish customer loyalty and to increase sales with customers who would not do business with your company otherwise. Consider the following tips when you are setting up your small business terms and conditions:

Understand the Legal Parameters
Each country has a separate standard for credit terms and you will want to familiarise yourself with those laws as you are setting up your small business terms and conditions. What are the legal requirements for customer returns or customer complaints? What are the customer’s rights and privacy laws in your country for small businesses? What disclaimers must your business post to do business with customers?

Establish Procedures
Establish systems and procedures within your small business and across departments to ensure a consistent business approach as it relates to terms and conditions. Consider what your current process is and what the gaps are when establishing procedures and practices in your small business. Define and set up a customer credit policy and communicate it to other team members to ensure a consistent work flow. Develop an application form and consider making it available on your company website for new customers to fill out when they are requesting credit from your business.

Establish a Credit Policy for Your Business
Establish a credit policy for your business which will include the circumstances that you will offer credit, the process to determine a customer’s credit and the terms and conditions that your small business is offering. Select and establish a collections policy for any customer that does not pay or is slow and communicate this process to all employees who would be involved to ensure consistency.

Create a Credit Term Discount
Consider creating a term discount for credit customers such as a 2% net 10 policy to encourage customers to pay their invoices early.

Establishing terms and conditions for your business will help to improve work flow and can enable larger customers who only work on credit to establish a relationship with your business. I encourage you to post a comment about your ideas or practices as it relates to effective terms and conditions that have been effective for your small business. Also, if you are not already a subscriber to my website, enrol to day so that you can continue to receive valuable small business tips such as this.

Whatever your reason, finally deciding to sell your business is probably one of the hardest decisions to make.  Suffice it to say that letting go of something that you have worked so hard for is akin to letting go of a family member or loved one.  Nevertheless, it is still a decision that you may have to make.  If you have to sell your business, however, you have to bear in mind that timing is crucial to making a profit out of the sale.

Impeccable Timing

Just like in stocks, sell when you’re up.  This means, the right time to let go of your business and sell it to someone else is when your business is still showing profits, when prospects of growth are good and when your products are selling like hotcakes.  In addition, you must have a stable network of associates, suppliers, service providers and such – all of whom are vital in not only running your business properly but also in maintaining your position at the top.

Selling when you’re down and out only means that your last recourse to get out of debt is to foreclose and sell because you can no longer manage and run the business profitably.  Your prospects for good buyers will be slim when this happens since no one wants to take over a business that is unprofitable and whose brand identity may be associated with flop after flop.

While your business is booming, look at the others in your industry.  In fact, check the trending in your particular field.  Having a successful business does not mean that your competitors are enjoying the same good fate and that your industry is, for lack of a better term, on the up and up as well.  If your over-all industry situation does not look good, you might get a few buyers but you will not be earning as much as when everything is going great.

Sell to the Highest Bidder?

The great thing about selling a successful business in an industry full of promise and potential is that buyers will stop at nothing to get their hands on a goldmine.  While you may be tempted to sell to the highest bidder, this may not always work out in the end.

You have to remember that if the business you are selling is something that you believe in and love, selling to the highest bidder should not be your sole priority.  If you sell your business with only profit in mind, without taking into account the kind of people who will take over, you will be cheating yourself out of the fulfilment that your business could have given you.  In effect, you may also be cheating your employees, clients and suppliers with whom you have built long-standing relationships.

It would be much better if you sell your business to the highest bidder who is also the best candidate to take over.  Someone who will love the business as much as you, perhaps even more; someone who knows the ins and outs of the business; someone who’s not afraid of hard work; and someone who will absorb all of your employees, deal fairly with suppliers and take proper care of your clients the way you’ve always done.

The business practice known as “outsourcing” was coined in the 1980s.  Outsourcing is a process involving the commission or transfer of a business process to an outside organisation capable of fulfilling that function.  Many types of business functions can and are being outsourced, such as accounting, customer support, human resources, information technology, real estate management, and customer support.

What is Outsourcing?

Outsourcing is an organisational decision usually requiring top-tier management approval.  The decision to divest is not a light one, as it involves the transfer of assets and people, which – depending on the laws of the country in which the outsourcing company is resident – can be assessed capital gains tax.

There are various reasons why companies outsource.  Some want their organisational effort to be focused on their so-called ‘core competencies’, and thus distribute ancillary tasks to an outsourcing entity.  Others are in a fiscal situation that requires them to transfer people and assets to offshore locations in order to avoid or minimise taxes that would be otherwise imposed on them.

Outsourcing is not exactly the same as off-shoring, however interchangeably the terms might be used.  When one outsources, he or she enters into a contract with a supplier or service provider, while off-shoring simply means the transfer of a function – which may or may not remain within the parent organisation – to an overseas location.  It is also different from subcontracting in that the supplier is not involved in a specific project only, but in the ongoing activities of the contracting firm.

Tax Benefits of Outsourcing

Businesses want to streamline their budget and reduce their tax liabilities.  By outsourcing certain tasks, they can operate under the aegis of the supplier and have minimal exposure in the supplier’s resident country.  This means that they will also have a minimal amount of the legal responsibility that accompanies such functions as the recruitment and termination of workers, property purchases, accounting functions such as payroll, and sometimes even incorporation.

Outsourcing is a way to reduce tax liabilities because with the expenses being incurred with the outsourcing process, the company can sometimes be assessed for a lower income tax.  In an era where companies do their utmost to streamline tax outlays and other expenditures to achieve the maximum possible efficiency, this can prove to be a winning edge in a very competitive arena.

Outsourcing can also save the contractor money because a lot of foreign outsourcing destinations offer tax incentives to entice companies to avail of the services of locally-based suppliers.  These can take the form of regional tax perks or income tax relief, and is a factor whose effect is usually taken into consideration early on in the outsourcing process.

Other Benefits

Outsourcing also offers other advantages apart from the reduction in tax liabilities.  It enables access to a larger labour pool whose talents may have been previously inaccessible had the contracting organisation chosen to keep the process in-house; the service provided is backed by a binding contract with legal redress; the provider can give higher-quality service than possible within the parent organisation; it reduces time-to-market; and if and when the outsourced function is no longer needed, the contract can be terminated and the services either given to another supplier or taken back into the company that outsourced it in the first place.

Time Management is perhaps one of the most talked about subjects not just in the business world but in our social circles as well. 

The concept or the idea has been elevated to the point that it has become an abstract principle or an ideal – much like those taught in monasteries and temples of ancient religions such as the 7 gates to inner peace or the secrets of energy flow – always to be sought but never to be achieved. 

Some people will brag about how they are never late for appointments, but is this really the essence of time management? 

Some people will talk about the increased profits and revenues from their business and present this as a proof of their mastery of time management.  Is this all there is to it? 

Can you say that time is your ally when you come home late every night with barely enough time to eat, much more sleep?  Can you say that time management has truly been a big factor in your success when you’d give away your liver or one of your kidneys just so you can have a clone that could do what still remains to be done in what little time that you have?

What It Is and What It Is Not

Far from being an abstract idea or an ideal, time management is actually a practical method for managing our time.  It is composed of specific steps and sound principles that are easy to understand and follow. 

Of course, as with diet formulas and leadership programs, your biggest enemy in catalysing or inducing this change is yourself, particularly your discipline and perseverance. 

Contrary to popular belief, time management is not only about getting more things done.  In fact, as you read on, you will realise that you will have to let go of some of your most time-consuming tasks if you want to become an effective time manager. 

In my complimentary eCourse at www.secretstobettertimemanagement.com I share some proven time management techniques.  Over 7, brief on-line lessons, you’ll gain access to some of the best tips to help you to maximise your productivity, overcome procrastination and take charge of your life!  

Time management is getting more important things done efficiently.  It is not about working harder or logging in more hours at work; it is about maximising the potential value of time spent and investing in a time management system that will let you use time as efficiently as you can and thereby achieve optimum use of your time. 

In the same light, although time management starts with ourselves, it is not limited to what we do.  In fact, most of the fruits of time management will come only after efficiently cooperating and synergising with other people.  In this sense, to be effective in time management, you will also need to be effective in dealing with other people. 

Much like the way passive incomes grow from long-term monetary investments, so will passive work grow from long-term time investments in yourself, in things that you use and do, and in other people.

Lastly, time management is not and will never be a one-size-fits-all kind of program.  Something working well for other people is no assurance – no guarantee – that the same technique will work as effectively for you. 

It is not like a toy or a gadget that you need to assemble only once to ensure results.  Rather, it is a personalised process of change that differs from one person to another.  It requires continuous assessment, feedback and adaptation on your part to work.

If you need a helping hand to get you started, just visit www.secretstobettertimemanagement.com for 7 brief, daily on-line lessons that’ll take you less than 5 minutes per day to read.  Don’t wait – do it now!