With 80% +/- of small businesses failures happening because they lack working capital or because their business capitalization plan didn’t work once they started up and started selling they also fail due to a lack of planning originating from their owner making decisions that were:
- Emotion based vs. Objective … or better said: Not financial or market based
- Want based vs. Need based
- Advice based from someone with little to no practical experience in business
Much of business success is intuitive HOWEVER most of it is objectively founded based on that intuition so somewhere along the line vision and logic need to blend together so …
- First off: When you are starting up you are on a “cash flow” diet … accept it and get over it!
- Second: Your resources are limited to what you have … you cannot spend “tomorrow”
- Thirdly: Grow your sales and grow your assets and collateral … or get in line for the poor farm!
- Fourth: A business without a well thought out plan has the odds stacked against it to fail – miserably!!!
A most common failure: Many business owners, right out of the gate, want to flash the BMW and the Rolex … but if it taxes the business you might lose it all. Accept this concept: When you are starting up you don’t own your business … IT OWNS YOU!
FOLKS: I’d rather be eating oatmeal … and I have and sometimes still do when it’s appropriate … and know that I can react to an opportunity vs. having to let that opportunity go by the wayside because I was frivolous with my assets. Being “lucky” isn’t just a matter of being in the right place at the right time … it’s a matter of being ready when you are in the right place at the right time. That said I always keep a bumper of working capital or that extra availability with my credit line intead of spending it but I will also admit: I’ve been to the edge of the precipice many times and probably will again … but that’s what makes being an entrpreneur all that it is and damned do I love it!
What is the secret to making it? Grit and common sense … and mostly the latter. All too often business owners are not realistic in what they envision:
- Financial: They don’t assess what they really need to make it happen
- Market: They don’t really understand the market challenges they are attempting to enter
- Business Operation: They have no clue how to run a business
Sadly: They are pationate – and then some; they are great people – and then some; but they didn’t assess what they were doing or where they were going. I call this the “SUNSET SYNDROME” … where a person envisions themselves bathing in the majesty of the sunset and trip over the sidewalk at their feet because they didn’t even assess their first step. Think on this …
Business success for some might be a quick leap that just happens and God Bless those that come about it that way but for the majority it’s a series of baby steps and short term goals that build up and grow and suddenly you’re there. If not? Hopefully you’re still safe and sound.
Think on these things … and be careful not to fall because you’re day dreaming about where you could be instead of knowing where you are!