How to Stay Up Float Against The Competition

how to stay up float against the competition

Why Small Businesses Fail

There are many reasons why a business fails, but you can always find a forecast to help you dodge and change strategy before it is too late. Here are some of the most common reasons and solutions.

Lack of Planning

One of those reasons is the lack of planning. Planning is the guide you need to do a business, any business. It doesn’t matter if you are starting or growing; it would be best to have a plan to guide you through all the steps.

Many people will tell you, “Oh, don’t worry; you don’t need a plan to start a business.” That is a big mistake. The lack of planning is one of the main reasons businesses don’t succeed and fail during their 1st year. It would help if you prepared for a battle, not a game. Businesses are competitive entities, especially online businesses.

Solution:

Develop a simple but efficient plan to guide you. It is not just enough to develop a master plan; you need to know how to use it, in other words, how to implement what your guide states.

Write your business plan.

Small Businesses Are The One With The Least Amount of Money to Succeed, But The Most Pressure To Survive!
Zona B.F.G.

Lack of Money and Budget Management

Another main reason for a business to fail is the lack of money and budget administration. Let’s start with the first one, the lack of funds. Many people start a business without planning the amount of money they will need at the beginning, middle and long run. Yes, you need money to make money.

It usually takes at least 3 to 6 months for an online business to break even. So, you need to prepare a budget to last even beyond that, about 12 months. The main suggestion is to remain in your current job if you are starting a business. Please don’t quit your regular job to start a business; it is usually the reverse.

Once your business makes good earnings, you can consider moving forward or lowering the number of hours even during the low turns. Never quit without having the advice of your Accountant.

The second part, budget administration, is knowing when to use the money. Properly using the funds will not only help you conserve your capital longer, but it will also help you invest in the right places or things. In addition, a healthy knowledge of budget administration will give you the tools to deal with wages, product inventory, debt payments, and much more. The better you handle your money, the faster you can grow as an entrepreneur.

Losing your budget means squandering the power to make decisions, longevity, and growth.

Solution:

You won’t need to go running and take a finance course. No, don’t worry; at Zona B.F.G., we are committed to helping you throughout your journey. While it is not difficult to learn about business finance, it is a must if you want to succeed and remain in the world of enterprises. Even though we are encouraging you to learn, it is indispensable to request a professional’s help in finances, like an accountant. Don’t worry; they are not as expensive as you think! You can learn the basics of business finance in our article, Finances for the No-financial.

Manage your finances

Inappropriate Capital Expenditure (CAPEX- Capital Expenditures [one significant expense])

Capital expenses are those purchases that help the business’s future performance. In other words, you purchase something; it can be a piece of new equipment, a new truck, new warehouse to advance your business to remain in long-run operation.

Every capital expense is based on the principle of significant investments to help the company’s performance in future times. In other words, it enables you to stay in business. So, if you’re investing, first analyze how such an asset will bring a competitive edge to your business. How will that capital expense lower the production cost, and how long will it take to recuperate the investment? Don’t buy things because you “think” is what you need.

Most entrepreneurs, if not all, who have successful businesses, don’t make impulsive decisions. Instead, they ask experts, financial advisers, accountants, and even lawyers to find out how expenses affect their business. They calculate every move. Learn to do the same. Read more here: SBA Buying Assets.

Solution:

You know what you need and what you don’t need to make your company stay in business. Of course, everybody wishes for a yacht, a mansion, exotic vacations, fine wines, and the best cars. I mean, you are not the only one. But take the time to look at the reality behind all that. How long does it take Jeff Bezos, Bill Gates, Mark Zuckerberg, and Oprah to have all that?

To do a successful business, it takes time, dedication, and savvy decisions at the hand of professionals. So run to your Accountant before any capital expense; it may not even qualify for a tax deduction.

Debt to Equity Ratio, Demystified

Stay Focus on Possible Problems to Find Strategies, or ask us!

Lack of Expenses Control (OPEX- Operating Expenses [or day to day expenses])

It would be best if you kept all expenses under tight control. You need to be strategic when reducing the budget in certain areas and savvy when increasing it in others. The logic will tell you to cut in the areas of low performance while increasing those of high performance. But before you do anything, check why you have low-performance zones, how those areas can affect others, and how to develop a plan to increase the performance at a low budget without affecting the company overall.

Budget management helps you to understand your place regarding competitiveness. A business with high expenses or debts usually has a high disadvantage when competing with others. Maintaining a high-cost business means you have fewer profits to keep—the lower the gain, the bigger your chance to fail. Even more, if you need to borrow from a bank or request a line of credit in the future, your options are minimal. Banks and other financial institutions see high-maintenance businesses (high expenses) as risky investments. On the contrary, a well-managed expenditure budget produces a higher capacity for borrowing and endurance.

When you control the costs, you give yourself a bigger chance to make better decisions, act according to the needs, and, most importantly, a more significant change to keep the business alive.

You can use the following formula to help you understand where your money is going:

Operating expenses = license fees + office expenses + legal fees + insurance + travel and vehicle expenses + salaries and wages + accounting expenses + maintenance and repairs + supplies + advertising + utilities + property taxes

Here is an example of what your expenses will be:

Office Space

Equipment & Supplies

Communications

Utilities

Licenses or Permits

Insurance

Lawyer & Accountant

Inventory

Employees Salaries

Advertising & Marketing

Printed Marketing

Making a Website

If you feel you need help, the Small Business Administration offers FREE counselors to help you during the process. Visit SBA Local Assistance for more information.

Solution:

Do an inventory of your expenses. Check with one of those expenses is not beneficial for your business or survival. After all, you created a company with the desire to be financially free. Make a list of everything you spend on, from your inventory, employees, warehouse, shipping, shipping supplies, office supplies, utilities, your salary, everything. Do this month by month, and check what is reducing your budget. Then, start to make a strategic plan to lower the expenses and increasing the profits. One thing you cannot eliminate from your budget is taxes. So take into consideration taxes, accountants, insurance, etc. Sometimes, the money goes to “little rewards” you do to yourself, like boats, cars, houses, and vacations. All those extra “little rewards” are what kill companies.

13 Money Management Mistakes Small Business Owners Make

Lack of Industry Experience

This topic may sound crazy, but many people start a business without knowing what it entails. I am not talking about just business administration knowledge but basics like calculating shipping costs. Zona Shoppers Academy was developed for those types of entrepreneurs. Do not let the lack of knowledge stop you! We know you want to succeed, so let us help you achieve that.

Solution:

Start by reading as much as possible about the basics: Financial Management, Marketing, Sales, Customer Service, Communications, Negotiation, Leadership, Project Management, Planning, Delegation & Time Management, Problem Solving, and Networking.

Don’t worry, it looks like a lot, but you need to know the basics. But it would be best to read more about each of those topics.

Do you remember I told you previously that entrepreneurs consult everything? Well, they also read about everything related to their businesses. They don’t waste their time watching Netflix 24/7. Instead, we recommend researching Google, YouTube, public libraries, colleges, and reading the news.

Learn as much as you can. Keep yourself informed about the latest tendencies, for example. You can find more information on the Harvard Business School. It is free information that can help you get close to your goal.

Overlooking Competition

Parents, during Christmas, check the best deals for Santa’s gift list. There is nothing to be ashamed of; we all do it, or at least those who want to save some money.

The deal is that millions of people do it just like you check. By disregarding your competition, you are helping that competition win. For example, imagine you have a store with values you think are “the right price.” You decide to price your items higher than the competition, thinking, “the higher the price, the more people think this is a great product.”

Unfortunately, it doesn’t work like that anymore. Nowadays, almost 90% of the population has a mobile device. Well, mobile devices are the perfect tool for instant verification. This means they don’t have to take a car, a coupon paper, or a trip to a mall; they press some buttons and “voilà” to find the information they want. So, keep alert to their strategies.

Solution:

The best way to understand the actions of others is by studying their moves, just like a chess game. So, observe, keep records, visit their stores periodically, and become a detective of their strategies, or you can visit the article Building my eCommerce Watchtower to get the most impressive information at your fingertips.

Unreasonable Goals

“Get rich in 3 months”, “Sell 500% more in just one month”, or the best one I saw on YouTube, “Get Rich While You Sleep.” I have no idea how many times I have told people, do not believe that. Those are schemes based on nothing but false allegations.
Do you think it took Apple 3 months to become what it is today? No, it took 20 years. Yes, I understand it is much time, but hopefully, you are not developing a new communication device never seen before.

Let’s talk clearly if you want to succeed; it will take you at least 12 to 18 months for a business to start positioning. That is the time it will take to learn as much as possible, manage your budget as best as possible, and produce your best customer service. So always look at the positive of things.

Another unreasonable goal is to attract many customers fast. That doesn’t work like that; finding great friends in real life takes time. It is the same with businesses; it takes time to find good customers.

Also, you should not set yourself to fail, so don’t believe you can expand a business quickly. Many people want to sell globally when they are not even known locally. Whatever your goals are, try to make them so you can manage them in months or throughout 3 to 6 months.

Solution:
Research how long it takes for companies to succeed. Us in Zona Shoppers will not lie to you; it takes time and work to make money, but once you learn, the sky is your limit. Learn to be patient. Work on monthly instead of yearly goals. Develop goals based on your possibilities regarding budget and products. In other words, don’t promise what you cannot give. Always be honest with yourself.

Why Setting Unrealistic Goals For Your Business Isn’t A Bad Thing

All the reasons mentioned above and those we didn’t say are easy to handle. They are also predictable. Anyone can take these aspects of a business.

Most other e-commerce teaches you about keywords and how to use particular gadgets on their platform but forget about the most crucial aspect, you! We work hard for you to help you achieve your goals.