Business Mentor: Build a Strong Business and Avoid Bankruptcy
If you have low financial literacy it can be a disaster for your business. You have to be very careful not to take huge risks that could hamper the growth of your business.
Make sure your finances stay intact by following these tips.
1. Start with a good business plan. This guides you through the steps to follow based on a schedule you set. There may be times when an idea comes up that you want to include it in the plan, but if you don’t know what that addition will lead to, it could ruin your entire plan.
2. Deal with the right people and know their ability to meet their obligations. While your goal is to get as many customers as possible, always expect the worst. All of these customers may not be able to pay on time, and some may not even pay at all.
3. Prioritize all obligations. If you’ve taken out a loan, make sure you pay it off religiously on time. Imagine how much it would cost you if you missed your payments for months – the interest incurred could get even higher than the principal amount.
4. Invest in software that can help you run the business. There are applications which can automate certain functions which include inventory management. This way, you can easily find all your products with just a few clicks.
5. Spend within your means and never overspend. Some entrepreneurs who feel they are successful tend to overspend on personal purchases. Although the business is yours, you should learn how to take a certain percentage of your monthly sales and use it for your personal expenses rather than taking any amount all the time. Remember that you have monthly overhead costs that you have to deal with that should always be covered first before you use the money for other things.
6. Create a network that can help your business. Know people who can help you achieve your business goals, especially lenders. Maintaining a good relationship with these people ensures that when you need additional funding, there will be people ready to help. Prove to them that you deserve the help you need and that your business is not going south.
7. Ask your suppliers if they can agree on a consignment basis. If you own a grocery store, instead of paying for your order in cash, ask your suppliers if they are willing to defer payment until the goods are actually sold.
8. Create additional short-term cash flow. It wouldn’t hurt if you found other ways to generate more income for the business as long as it was carefully thought out. For example, offer delivery if you can. This allows your products to reach your customers even if they cannot pass through your store.
9. Create a retirement plan. You should start thinking about who will succeed you in the business. May it be this heritage that your children will be proud of. Know which of your children is the best candidate to take over the business, which can grow the business even further.
Getting into the entrepreneurship game is a huge step forward. Therefore, use the opportunity wisely.
For more information, you can contact Armando “Butz” Bartolome
by email: [email protected]
FB page: Butz Bartolomé