Entrepreneurship: Daily Challenges to Growing a Business
Operating a Business is an Ongoing Endeavor
Starting a business, the dream of many a young entrepreneur, is only the beginning of a long and continuing process. Running the business, maintaining the business and keeping it on track will require hard work and dedication on the part of the business owner. Although there are many aspects to be considered, only four of them will be discussed here.
The first consideration when running a business is to make sure that cash flow is properly managed. In any business there will be income and outflow. A mistake that many entrepreneurs make is assuming that as long as what they spend is less than what they make, then all the books will balance evenly. The problem with this approach is that there are many more avenues to consider. Just because products or services are being sold does not mean that money is necessarily coming in as it is spent. Many customers will purchase on credit, and will wait until the end of the month to pay their bills. Oftentimes when dealing with other businesses, income from those sales may not come in until three or more months later. When considering all the expenses that a business may incur: salaries, utility bills, maintenance, insurance, etc., it is important for the business owner to always be aware not only of how much money is coming in, but also when it is coming in and how much money is on hand.
A second area to consider is price stability. Many startups tend to fail because they try to go head-to-head with a much larger established business. Once, while in college, I worked for a small diner that tried to compete directly against an established franchise directly across the street. We began selling the exact same items, albeit at a lower price. Some customers began to patronize our establishment, but when the competitor responded by lowering their prices, the diners returned to the previous restaurant. Our manager once again lowered our prices; the other establishment answered in kind. After only a few weeks, they were selling their food products for much less than we were paying for our raw ingredients. Because they had hundreds of other restaurants across the globe that could absorb the costs, they would have been able to give their food away and they still would have been able to compete against us. We were forced to create a menu that was not in direct competition with theirs. Instead of trying to put larger companies out of business, new startups should concentrate on supplying a product that is unique, or at least different enough than that of surrounding established businesses to allow a go at it.
Another concern when running a business is quality control. People tend to gravitate towards a business that is known for providing a personable one-on-one experience to its customers. Sometimes a new company will grow more quickly than originally anticipated, causing customer service and other amenities to suffer. Some things that people have little tolerance for are long lines, rude staff, and a shortage of items. These are all things that can occur if a new business does not plan ahead for periods of rapid growth.
Capital constraints are another area where startups run into problems. Getting that first loan or investment may seem like a dream come true, but in reality, that is usually just the beginning. Later on as a business grows, it may come across a situation where another loan or round of investments suddenly becomes necessary. Whether it be the need for more buildings, more employees, or larger inventories, being prepared to entertain others for loans or investments will be something that the new business must be ready for.
Always Plan Ahead
Whether you are thinking of starting a new business, or you have already started one, it is always recommended that entrepreneurs do their due diligence to find out exactly how they should keep their new business afloat. Very few things are as disheartening as losing your life savings because you did not do you homework regarding how to run and maintain your new business.
© 2019 Stephen Moore