Starting a new business can be difficult. Nearly one quarter of all businesses fail about one year after they open. Nearly 50% of all new businesses go under within four years. Many do not succeed, because they cannot get access to enough start up capital. Others go under because of sheer incompetence, which accounts for nearly half (46%) of all business failures.
The problems caused by incompetence include improper pricing, a failure to pay taxes, bad business planning and improper, or lack of record keeping. Poor management kills another 30% of new businesses.
These companies expand before they are ready to, do not borrow the right amount of money, or do not understand the best way to grant credit to customers. If you are going into a new business, having a thorough financial risk analysis done can start you off on a better foot, and help your business succeed where others have not.
Make Better Business Decisions with These Tips:
- Think about Patton
General George S. Patton once said, “A good plan violently executed now is better than a perfect plan executed next week.” That can be translated into business success by forgetting about perfection. If you are constantly thinking that you have to be perfect, you are never going to get anywhere in business. You can overthink things and get stuck, so that nothing gets done. Getting 80% of something done and delivered early is better than 100% done and delivered late.
- Get outside of your head sometimes
It is possible to over think something or to just spend too much time in your own head. Take off your thinking cap from time to time and give yourself a rest. This may seem counter-intuitive in a culture that glorifies being a workaholic, but spending some time on something else, even a nap every now and again, gives your brain a chance to rest and let the creative juices flow. You may be inspired by something, or an idea or solution to a program will suddenly appear when you are thinking about something else. This is one of the reasons people remember where they put things they lost when they are asleep.
- Do not run away from your mistakes
Everyone makes them. It takes a lot more strength of character to admit a mistake than a good decision, but you can learn a lot from the things you do wrong. Do not compound a mistake by failing to learn from it. If you do, you will probably repeat it and that really is a waste. If you do your own financial risk analysis and find you did a bad job, own up to it and go to someone who can do it better. Admit your mistake, but do not dwell on it.
- Make decisions
When you make a decision, you have to weigh the variables and costs of each choice. This process is more effective at moving your business in the right direction than problem solving, because it involves more action. For instance, when you are hiring vendors, look at your current assets to determine what you can afford. Take your financial risk analysis report and use it wisely.
Surround yourself with people who are experts at what they do and let them do their job. No one got far when they had a boss watching their every step, second guessing every move. Empower your staff to make good decisions and trust them. If you have spent the right amount of time building a good team, this should not be a problem. Have a competent firm or person help with your financial risk analysis, for example, and listen to their advice.
When you decide to start a business, it is worth getting outside help to draw up your business plan and conduct a financial risk analysis for you. Even if you have a master’s in business administration, it is easy to be too emotional about a project that means a lot to you. Sometimes an outside eye is what you need to make your dream become a reality.