The failure rate of startup businesses is not news to anyone in the world of entrepreneurship. And it's equally sad to know that if you sift through the carcasses of these dead businesses, you will definitely find startups that were founded on great business ideas.
You may wonder why businesses built on brilliant ideas still fail. The answer is usually fairly simple. Having an idea for a business and having an idea about how to run a business are two entirely different things. The reason most startups fail centers around two things -- management skill and financial skill. A dearth of any of these two can kill your business.
If you are a startup entrepreneur, here are a few tips to help ensure that you maintain your capital base, and enhance your profit margins as soon as possible.
1. Postpone personnel rewards.
Starting and running a business is already a herculean task on its own. Think of how much worse things will be if you start dolling out exorbitant amounts of money on unnecessary employment benefits and expensive salaries. You can avoid depleting your capital by avoiding these practices. Set your employee salaries reasonably and agument it with performance bonuses.
If you must have employee benefits, limit them to only those that are critical to motivating employees to achieving the set goals and objectives. Beyond helping you save money by breaking even and turning profit sooner, this practice will help you develop a culture of frugal and disciplined spending in your business.
2. Keep personal and business finances separate.
You are the founder of your business. This implies that you own the business. The problem comes up when you mistake this to mean that you are the business. No successful business can be run with such a mindset.
Always keep your personal and your business finances separate. Money made from the business is for the purpose of maintaining and growing the business. If you do not separate these two, you will soon find yourself dipping your hands into the business’ coffers for reasons that are only of personal benefit.
It helps to have you on the payroll of the business like every other employee. This ensures that you are making money from your business while also preventing you from depleting business funds.
3. Spend cheap with coupons.
Don't ever buy stuff because you can afford to. Having enough money to make a purchase does not mean that you should make it. Develop the habit of looking around while shopping -- especially online -- to ensure that you get the best possible deal.
One way to spend cheaply is by using coupons. You will be amazed how much you can save.
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Source: ENTREPRENEUR
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