Some entrepreneurs are too focused on their ideas, and not on their finances. If you always care to examine why business starters fail, you will see that the problem includes a lack of innovation, mismanagement of financial resources, failure to hire the right people, inability to access capital; Inability to adapt to changing business environment and immigration policies. Have you ever asked what the American economy would look like if most of the failed businesses were successful? Let’s start with repairs. Most small businesses are born based on big ideas and not financial problems.
1. Get to know your business cash flow analysis
Some small business owners do not have a financial background, but are curious about the basic inflows and cash flow for their business. You need to balance these two and maintain a cash balance. You can manage your funds to cover operational costs and estimated potential problems in the future.
2. Ask the Consultant for Help
It is impossible for a small business to become an expert at everything, which is why trying to hire permanent employees to cover every function is a mistake. Compare the costs of hiring permanent employees to get the services you need from a consultant. You can save business resources and achieve greater results by hiring a consultant in no time. Use a consultant for specific skills needed in the short term, as opposed to hiring someone.
3. Financial discipline
Generally, tightening financial discipline is not only on business requirements, but also as a habit that small business owners must instill with as much passion as they do with the big idea. You need an annual budget that really takes into account seasonal spikes and declines, plus anticipating periodic capital expenditure. Second, use VPN and personal internet protection to prevent hackers. VPN private internet access is quite affordable and is one of the safest ways to surf your web.
4. Business Profit-Loss Projection
Making projections or the number of sales forecasts and operating expenses is important to do. I suggest you make projections for the next 12 months from the first time the business operates. How to make a projection is to compare the potential sales revenue (turnover) with the cost of goods sold (cost of goods sold) plus fixed operational costs (fixed cost). Set the estimated sales price.
5. Estimated Cash Flow
A new business often needs cash to build the capacity needed to serve customers. Having an estimated cash flow of funding is important to avoid funding shortages at the start of a business. Funding activities in cash flow include activities to obtain cash from investors or creditors needed to carry out and continue the company’s activities. Funding activities include the issuance of shares, selling treasury shares, and payments to shareholders.
6. Risk Management
No matter how good a business idea, the name of risk is always there. In a business plan, this business risk is operational risk, liquidity risk, business receipt and others. Don’t forget to write down strategies to deal with this worst possibility.