Setting Up Your Own Business? Avoid these 3 mistakes to better ensure the survival of your company.
The advent of the internet age also means setting up your own business has become a breeze. Whether you are operating an e-commerce or selling coffee in a hipster cafe, there are some business fundamentals that apply to all business owners. Provided below are three very common mistakes that you should avoid so that you remain firmly on the road to success!
1) Cashflow Management
No matter how big or small a business is, understanding cashflow is a key knowledge any business owner should have. Cash flow is essentially the movement of cash in and out of your business. A negative cash flow happens when your cash outflow is more than the amount of cash coming into your business account. Cashflow is important as it impacts your daily business operations.
Imagine this: You are a clothing distributor to several shops in Far East Plaza. You would usually buy your clothes overseas and sell it to your clients locally. This means that you need to pay your wholesaler upfront, and only receive revenue from your clients at the end of the month. Will you have enough cash on hand to be able to pay upfront first?
When it comes to managing cash flow, you can either try to get money to come in faster or reduce the amount of money tied up(in your clothes inventory for example) so as to generate more cash. In this example, is there a way for you to get your clients to pay you upfront and delay the payment to your wholesaler? This will give you more cash from your clients to pay for the goods you ordered so that you do not need to borrow from banks and incur extra business costs.
A business can be profitable but be in negative cash flow. This is why a successful and profitable company can still go bankrupt! Thus, managing cashflow is a crucial skill that any business owner should learn in order to ensure the survival of their company.
2) Not Investing In Marketing
For a new business, entrepreneurs are usually struggling to stay afloat, cutting as much business cost as they can. This is why they often neglect the importance of investing in marketing. How else can you increase reach to a wider audience if you do not invest in marketing?
Because you are not Apple, Coca Cola or L’oreal(which still invest millions in marketing by the way), the more compelling the reason for you to get your brand name out there.
Marketing does not need to be expensive or fanciful, thanks to the internet. You no longer need to spend thousands of dollars on a small print ad on the local newspapers. Setting up a Facebook page or Instagram account is free, you only need to invest time in managing it.
Updating your website with relevant content articles for your audience once a week takes you less than 2 hours a week and tracking the results of your effort also forces you to learn new skills and understand new ways to grow your business. You’d be surprised, a little effort can prove huge results over the long term – it works a bit like compounding interest.
3) Not Willing To Learn New Skills
One reason why I have tremendous respect for anyone who has ever launched their own business is the fact that they are willing to take the risk of having to learn everything needed to grow their business. Business owners are usually conscientious learners – if you aren’t, you’d realise that you will be forced to be one.
Let’s say, your core skill is in web design, you’d soon find that having that skill itself will not be enough in providing your clients with the services they need. Together with designing a website includes copywriting, understanding user experience or perhaps building a landing page for client registration.
How are you going to sell yourself if you stick to just one skill? You’d have to either learn the skills, or engage others who can provide these complementary skills.
You’d also realise that running a business means you need to learn simple accounting, marketing, perform administrative work and learn sales. If you aren’t ready to embrace these as part of business building, then perhaps you are better suited to work for someone else!