When it comes to business failures, mistakes in business and business challenges; I bet I have written a lot on this business blog with respect to those subjects. So today, I want to deal strictly on how to prevent your business from failing. If you interested in reading my published articles with respect to the subjects mentioned above; below is a quick link for you.
Since you have gotten a quick glance at the article list above, let’s get back to business. Statistics shows that 99% of all businesses started, fail in their first five years. Now what’s the cause of such high rate of business failure? I can’t answer that here because I’ve explained everything in previous articles; just check the articles listed above to find your answer.
In this article, I want to simply share with you how you can get your business off the list of the 99% failures; I want to share some tips that will help prevent your business from failing. If you are ready to learn, then below are eight ways to prevent your business from failing.
Small Business Survival: How to Prevent Your Business From Failing
1. Prepare for failure
“Prepare for bad times and you will only know good times.” – Robert Kiyosaki
Preventing your business from failing starts with you the entrepreneur because the survival of your business rest solely on your shoulders. Get yourself ready to fail but do all within your power to avoid failure and you will never fail. One of the primary reasons entrepreneurs fail is because they fear failure and that fear of failure prevents them from trying new innovations on their business.
“Most people say that the fear of failure is the beginning of hard work; that might be true in the world of employees and academic professionals but it’s doesn’t work that way on the street. When you fear failure, you become over cautious and over cautiousness is a requisite for failure. I believe the fear of failure is the beginning of failure. Entrepreneurs don’t fear failure; they thrive in the face of failure.” – Ajaero Tony Martins
As an entrepreneur, I will advice you prepare to face failure should in case it shows up. Preparing your mind for failure will help you bounce back quickly to success when you fall. Another way to prepare and prevent failure is to keep learning how to build a business. The business world is dynamic so you shouldn’t be static. After all, entrepreneurship is a process; a journey, not a destination. Use every free time you have to learn something and increase your knowledge; It will help your business in the long run.
2. Be careful of the decisions you make
"I have made tough decisions, always with an eye on the bottom line. Perhaps it's time America was run like a business." – Donald Trump
You are an entrepreneur and that makes you the pilot of your business. Therefore, the survival of your business tomorrow is dependent on the decision you make today. So don’t make hasty decisions; if you are in doubt over the effect of a decision you are about to take, discuss it with professionals and sleep over it. Even if it means seeking advice from external advisors; do it. A piece of advice from a seasoned professional can prevent your business from failing.
“Before making an important decision, get as much as you can of the best information available and review it carefully, analyze it and draw up worst case scenarios. Add up the plus or minus factors, discuss it with your team and do what your guts tell you to do.” – The Mafia Manager
3. Watch your cash flow
"The most important word in the world of money is cash flow. The second most important word is leverage." – Rich Dad
Cash flow is the life blood of business and I believe you have heard that a couple of times. Always keep an eye on the cash flow and work closely with your accounting department to keep your cash flow strong. Effective cash flow management is the bedrock of business growth.
"Know your numbers' is a fundamental precept of business." – Bill Gates
Make sure there’s a continuous flow of cash into your business even if it means making a few strategic moves on your creditors, debtors, suppliers, customers and investors. A business with poor cash flow management or a consistent negative cash flow is as good as dead.
"There is one paradoxical characteristic every entrepreneur must possess to succeed. An entrepreneur must be able to persuade his debtors to pay their debts promptly and at the same, must tactically delay payments to his creditors." – Ajaero Tony Martins
4. Move your business swiftly with the trend
"In today's rapidly changing world, the people who are not taking risk are the risk takers." – Rich Dad
On countless occasions, I have heard from successful entrepreneurs that trend is a friend; not an enemy and I think that’s the truth. Your ability as an entrepreneur to rapidly align your business with the changing trend can be a competitive advantage for your business.
"A company's ability to respond to an unplanned event, good or bad is a prime indicator of its ability to compete." – Bill Gates
Be swift to carry your business along with the current or upcoming industrial trend and innovation. Taking advantage of every available trend can help your business stay on course and prevent it from failing. Remember, trend is your friend.
"Every company can choose whether to lead or follow the emerging digital trends." – Bill Gates
5. Increase your sales and marketing budget
"The aim of marketing is to know and understand the customer so well that the products or service fits him and sells itself." – Peter F. Drucker
One of the silly mistakes made by most managers during a recession or decline in sales is to cut back on the marketing budget. Instead of cutting back on the marketing budget, I advice you spend more on marketing. Instead of going into hiding, I will advise you do some marketing and let your customers know you will stand by them; while at the same time letting competitors know that you are still in the game.
"Advertising is the mouth piece of business." – James R. Adams
6. Build good relationship with your employees
"We treat our people like royalty. If you honor and serve the people who work for you, they will honor and serve you." – Mary Kay Ash
Your employees are part of your business so treat them as you will wish they treat your business. Occasionally surprise them by either sending them an unexpected birthday gift or acknowledging their extra effort in presence of other staff. If possible, give incentives and promotions to staff with outstanding performance. It will encourage them and also motivate others to strive for excellence.
"People are definitely a company's greatest asset. It doesn't make any difference whether the company's product is cars or cosmetics. A company is only as good as the people it keeps." – Mary Kay Ash
7. Hire employees slowly but fire them fast
“If you own a butcher shop, don’t hire vegetarians. To hire the right people, you have to let the wrong people go.” – Rich Dad
Hire the right people in sensitive positions. You will know they are the right people after testing them. Never compromise the quality of your staff in the name of cutting cost; it will hurt your business in the long run. Another golden rule to preventing your business from failing is to fire employees fast.
“There will be times when you will have to be abrasive, even brutal to members of your staff. Don't worry that your people will say bad things about you because of this. They already have. But in general, try to be pleasant and accommodating. Try to please the greatest number who work for you that you can; antagonize the fewest. Blow smoke.” – The Mafia Manager
Do not hesitate to let go of bad members of your staff. If you don't get rid of them fast, they will negatively influence or demoralize other good employees with their bad attitude and inevitably, your good employees might leave.
"You must fire bad customers just as you would fire a bad employee. If you do not get rid of your bad employees, the good employees will leave. If I do not fire bad customers, not only will my good customers leave but many of my good employees will leave as well." – Rich Dad
8. Take care of your existing customers
"There is only one boss; the customer. And he can fire everybody in the company, from the chairman down, simply by spending his money somewhere else." – Sam Walton
Do you know that your customers are your company’s greatest asset? Without them, your business will not be in existence. From analysis carried out by the marketing experts, it has been reveal that it costs more effort and resources to find new customers than to retain existing ones.
"Business is not just doing deals; business is having great products, doing great engineering and providing tremendous service to customers. Finally, business is a cobweb of human relationship." – Henry Ross Perot
What if your customers abandon your business, will your business stay afloat? I leave you to answer the question. If you must know; existing customers are the most important key to small business survival. Treat them with care and they will spread the word about the wonderful experience you gave them.
"Courteous treatment will make a customer a walking advertisement." – James Cash Penny
One of my small business survival strategies during my early startup days was to stay true to our customers. My team and I established a closer relationship with the customers; provided excellent services and dealt with customer’s complaint with utmost priority.
"Spend a lot of time talking to customers face to face. You will be amazed at how many companies don't listen to their customers." – Henry Ross Perot
We did this because we knew the implication of losing one customer and beside that; our competitors were looking for an opportunity to poach our customers so we had to be on guard. If you interested in learning how to keep your customers loyal and happy, the articles below will be helpful.
"Customer service will become the primary value added function of every business." Bill Gates
I believe with these few small business survival strategies, you can prevent your business from failing. Always remember that your chance of either failing or succeeding in business depends entirely on you, so be wise.