In a prior article ‘Taking the Plunge’ I shared about emotional and mental readiness for the aspiring entrepreneur.
In this article, I impart some insights on how to succeed, or at least how to avoid failure. While there must be a thousand and one reasons for failure, what I have listed here are the handful that I feel you have some control over. nnnCASHFLOWnnCashflow to any business is like blood to life. Many profitable businesses go under because they run out of operating cash.
Businesses whose customers are other corporations are more exposed to this risk because they (these other corporations) impose 30-, 60- or even 90-day payment term policies. To a business setup that does not enjoy similar credit terms from up the supply chain, its double jeopardy.
If your business nature is such, factor in twice your calculation for initial cash requirement.
There are, however, businesses where payment is made at the point of purchase. Retail is one example, but the initial investments on the storefront, overheads and operating costs are exorbitant. A better model is to sell over the Internet. Web-based subscriptions and downloadable products are good options. nnnPRICINGnnCustomers readily run to the competitors for any cost saving they can squeeze. If you can help it, do not compete on pricing. Differentiate yourself by having a unique selling proposition. Perhaps package the product with a complementing service? Or maybe a modified feature that is helpful to that targeted niche?
It is important not to under-price your products or services. A couple months ago, I evaluated a bubble tea shop to decide whether or not to take it over.
It was strategically located, and it leveraged busy traffic to an eatery and a grocer. In addition, there were two secondary schools nearby. At any instant, more than a handful of teenagers crowded around its service counter.
Unfortunately, the monthly profit was far from acceptable. The problem lied in the pricing. To cater to the students, the operator had to price his drinks and snacks very low.
It made no financial sense for me to take over unless I found a partner on a funding-effort split.nnnPARTNERSnnThere is a Chinese saying “Getting along with someone is easy, but not so when it comes to living together’. It applies to partnering in business, too.
People perceive any given situation differently. When for example, the business is on track to success, one partner may deem that ‘it is not successful yet’. The other partner may well celebrate and start relaxing.
When the venture is already making money, they may differ on how much is enough. Or, what is next. Or, what proportion of the profits to roll over, or to be distributed.
Different working styles, different values, different belief systems, different finacial well-being, lack of communication, lack of trust - they can all affect a business that is otherwise ontrack to success.
If you are planning a partnership, do not be bashful about clarifying expectations right at the start. The partnership agreement should spell out everything significant. If you and your partner cannot get pass this crucial piece, it says a lot about being able to trash things out later.
Include exit clauses and strategies to avoid a costly and ugly break up.nnnMINDSETnnHow you perceive yourself, the business and its potentials – all of these get written on your face. They affect your
body language, and therefore your dealings with others. They are manifested in the actions you take, and consequently your results.
Adopting a positive mindset is easier said than done. More than ‘I can do it’ and ‘I will do it’ attitudes, it includes that nn- you declare your worth. Not only in monetary terms, but also in ethical, moral and spiritual terms. They call this self-affirmation.n- you see yourself at the position and success you desiren- you do not keep yearning for that temporary loss of income and comfortn- you see setbacks as opportunitiesn- you do not think about money to the point that you hold back rightful investmentsn- and yet you think enough about being better off financially to keep addiction to salary at bayn- you assess your routines regularly, and make necessary changes to those that do not yieldn- you change you ideas of what ‘productive work’ means. For example, I still struggle with the idea that networking sessions are necessary and productive.n- you be persevering. nnnnPERSEVERANCEnnIt is easy to feel depressed when 15 prospective customers turn you away.
It is easy to give up on the whole venture after spending two days getting nowhere with a technical hiccup. (Hey, shouldn’t I be working on the prospects instead?)
You have slogged for months without any tangible results.
It is hard to imagine your business will pick up in an uncertain economic climate.
In short, it is hard to see the light at the end of the tunnel.
By anticipating these setbacks, you will handle them better when they come.
Perseverence is that one quality needed to make things happen. Just ask any successful person. nnnONGOING EDUCATIONnnContinually educate yourself.
Listen to people – both those who are successful, and to those who have experienced failure. Open up to people in related businesses, and also to those outside.
If you chance upon an opportunity to attach to a mentor, jump at it. It can take years off the learning curve.
Seminars are a good learning ground. They need not be expensive nor time consuming. Subscription based online seminars by gururs like Brian Tracy and Anthony Robbins come very affordable. You can pause, replay and digest topics of your need, and you don’t have to take those precious time offs to attend these sessions.
By Ianny Laun