Why Businesses Fail

Why Businesses Fail

Why do businesses fail? They run out of cash! It's just that simple! 

Of course there are other reasons like bad management, not researching the competition, not having a plan, not pricing properly, etc. but really, it all culminates into one major result.

  • If you have bad management, chances are there will be an improper use or channelling of funds or losing good people which can turn into huge hiring costs on training new staff.
  • Not researching the competition will probably result in your business losing customers to the competition - so no inflow of funds.
  • Not having a plan - massive recipe for disaster because without a plan or a budget, you will have nothing to guide you.
  • Not pricing properly, - goodness, that is another story for another day!

The summary of all this is when you have negative cash flow because you are spending more than you are earning, you will run out of cash and the business will fail!

If you're at the point where your business is on life support, well first - take a deep breath! We've all been there and you will get out of it! You just have to know what to do so you can retrace your steps! 

So let's start from the very beginning to understand the real reasons for cash flow problems and what you can do about it.

No matter how good your business plan is or how talented your team is, things can always go wrong. No business is immune to failure, but by understanding the most common reasons why businesses fail, you can take steps to protect your small business.

One of the most common reasons businesses fail, like we said earlier, is due to cash flow problems. Not having enough money to cover your expenses is a sure-fire way to go under, and it can happen to even the most well-run companies.

Cash flow problems can stem from a number of different issues, such as not bringing in enough revenue to cover expenses, not being able to get paid on time by customers, or having to make large capital investments upfront or spending money on the wrong things! 

In my free book, 7 Mistakes to Avoid as an Entrepreneur this was my Mistake No 4!  Classic reason on why businesses fail. So let's focus on 'spending money on the wrong things for a bit!  I wish I really understood years ago when I started my business - watch your costs like a hawk!

While it's obviously hard to build something new without the resources to do so, spending money to make money only works if you are spending on the right things. Whatever you do, do not fall victim of unnecessary spending! 

Getting a space when you don't need to or can't even afford it , buying expensive machines without knowing where business will come from or premature hiring will all leave you crying premium tears. Save as much as you can in the early days till your businesses is strong enough to get to the next level.

So ask yourself these questions:


Getting an Office Space:

Do you really need that office?  You do know it won't end with just the space right? You need to renovate, furnish and do some nice interior decor. And then add the extra electricity, utility and maintenance bills and it does rack up pretty quickly. 

At this point, how exactly will this new office generate income? You might feel you need a professional space to meet with your clients but how about using a virtual office in the early days? Or go out to meet the customer? Or work from a hub?

If you are a fashion designer who needs a production space, there are sewing hubs you can use in the early days to save yourself the huge expense of renting a place. Or you can work from home and meet your client in their space. It probably is financially wise to start with that.

Of course, if you are financially capable of getting a space, please go for it.


Getting expensive tools:

Do you really need those machines? Or that printer? Far too many small business owners buy things they don’t necessarily need.  They either buy tools they don’t need, or buy tools that are bloated with features they don’t use and may never use.

Better to purchase something that would suit a business of your size as long as it saves you a fair amount of money while being equally as effective.

Which brings me to another point. Try purchasing things that give the reasonable amount of benefit at that point in time with minimal cost - and which are directly related to revenue generation.

For example, you might want to use the free version of things and only upgrade when you have the stream of revenue to justify your upgrade or if you need some additional features that are important to your business.


Premature Hiring: 

Mistake No 3 that I highlighted in my free ebook, 7 Mistakes to Avoid as an Entrepreneur.  Like I said - been there, done that! It might seem tempting but don't hire until you absolutely have to. And the person you hire must either be able to increase revenue or reduce costs. 

Do you really need that PA to run those personal errands? I remember when I first started, I felt I needed that driver because I could not cope with the traffic. Well, turned out, I didn't really need him after all. I didn't move around often. After he left, I didn't get another driver. Turns out I just wasted all that money in the early days. 

If you don’t need it, then don’t do it. Hiring people too quickly makes you burn cash faster than you need to. In fact, staff costs tend to be the highest expense of a company.  Yes the temptation to get a sales and marketing team to boost revenue might be high, but if you can outsource it or get someone part-time, better for you.

Put into consideration which is more cost effective for you before you make a full-time hire. Don’t hire a full-time staff when you don’t have a full-time job for them. 


Premature Scaling: 

Lastly, do not scale prematurely. Let's put it simply using the earlier example. Do not go paying for office space before you have employees to fill it. Start small and grow gradually. It can't be perfect from Day 1 so take your time and enjoy your growth process.

And these are just a few. So now, let's talk about some other solutions that can help you tackle your cash flow problems!


Know your real costs

Costs can be categorized as either fixed costs or variable costs. Fixed costs are those that do not change with the level of production, for example rent. Variable costs are those that vary directly with the level of production, for instance raw materials. Knowing true costs is critical to business success and will help you better understand your break-even point and where you need to cut back to make a profit.


'Get personal'

Get personal. How much money do you need to live on? Are you taking more out of the business than it can afford? One easy way to check is to compare your business with others in your industry. You can use the ATO benchmarking tool, which compares businesses of similar size and industry. It can help you identify whether your costs are higher or lower than other businesses. If you're paying yourself too much, consider cutting back and investing those savings into marketing or a new product line. Also consider that your lifestyle may need to change as a start-up founder in order for your business to succeed.


Work with others

When you're running a business, it's important to keep tabs on your money. You should know where it's coming from and where it's going. The easiest way to do this, first things first, is by hiring a bookkeeper or accountant to help you out. This person can keep track of all your transactions and advise you when things look skewed.

You may think you can handle the accounting all on your own, but the truth is that others are often better at noticing patterns than we are; an outsider who isn't as close to the flow of money in and out will be helpful in spotting missteps before they become disasters.

Plus, doing this work yourself takes away from more productive tasks that only you can do (like running a meeting). By outsourcing some of these time-consuming jobs to a trusted partner, you'll be able to focus better and achieve more...Next up: be strong with decision making


Understand your cash flow

Cash flow is the money that flows in and out of your business. It's different from profit, which is the difference between what you spend and what you earn. Cash flow can be positive (there's more cash coming in than going out), or negative (more cash going out than coming in).

To stay on top of your cash flow, understand how much cash you need to run your business, how much cash is coming into your business and what will affect this amount. Having an understanding of these three things will help you forecast the state of your finances at any given time during the year.

This is important because it allows you to make adjustments before there are problems with paying bills. For example: if sales are down for a particular month, this may mean less money being collected from customers for products sold that month. If there isn't enough money coming into the business to cover expenses like rent or payroll, this could cause serious financial issues for your business. Understanding when sales are expected to go up and down can help avoid these issues by allowing you time to plan ahead accordingly.


Lean on your suppliers

Don't be afraid to ask for price breaks when you first start out. Most suppliers are willing to help new businesses get off the ground by offering discounts or payment options, and they understand that strong relationships lead to long-term growth for everyone involved.  Never be shy when it comes to money matters. All you need to do is ask! The worst response you can get is a No. BUT you can also get a Yes so why not ask anyway?


Have a plan B (... and C)

No matter how much you've planned ahead, there's always a chance that something might go wrong with your project. A natural disaster could come through, and knock out power to your business. Or maybe you arrive at work one morning to find that someone has broken into your store, stolen all of your cash registers and set the place on fire. Yes, these are extreme examples, but they actually happened to real businesses in the past year.

The point is: it's smart to plan for the unexpected. Make sure that everyone involved in your business has a backup plan for when things don't go according to plan – and make sure that if you haven't already done so, you have a backup plan for your personal finances as well. After all: if you're going down with the ship, make sure it goes down as comfortably as possible!


In summary:

Understanding your cost structure is vital to your success as a small business owner as it is essential in determining the price at which you sell your product or service. It can also help ensure that you earn a profit and don't inadvertently price yourself out of the market.

Understanding your cost structure is also important when making decisions about the future, such as whether to expand your business. For example, if you decide to open a second location, having information about how much rent costs will allow you to estimate potential rental costs for this second location. Knowing how many employees and what type of equipment is needed per location will help determine employee and equipment costs for the new location. By understanding all these factors, you will be able to make an informed decision regarding whether expansion is a good idea.

In addition, knowing your cost structure enables you to negotiate with suppliers more effectively. For example, if there are several suppliers that offer similar products or services at different prices and all other things are equal (e.g., quality), then cost becomes an important factor when choosing who to buy from. If one supplier's prices are consistently lower than another's but each has offered essentially the same quality products or services for years, it makes sense for you to choose the less expensive option over time because it keeps more money in your pocket so that it could be reinvested into growing or maintaining your business as opposed to being spent on expenses!


Above all, remember that mistakes are not failures! They are teachers, information, guide posts and opportunities. It is best to avoid cash flow problems but when mistakes do happen, don't beat yourself off over it. If your business does shut down, at least now you know what not to do in your next business venture. Dust yourself off, learn from your mistakes and trust me, you will do better next time. 

If you have hit roadblocks, you should get this free ebook. It highlights 3 specific and common mistakes that lead to business cash flow problems and what you specifically need to do to fix it!

You can download your free copy here.  


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Why Gratitude is Great for Business

Why Gratitude is Great for Business

The Simple Act of being Grateful

Last Thursday, we had International Speaker & Director of Nigerian-Bollywood Netflix Hit, Namaste Wahala talk to us on our free Instagram LIVE Webinar on the topic:

How to Use Positive Affirmations, Positive Thinking & Gratitude to Achieve Defined Goals

We are one work-week into 2022 already! One of the things business owners must be watchful of is the ability to fall into a place of unthankfulness.

Perhaps you didn’t achieve your set goals for 2021 or it’s barely a few days into 2022 and #dettydecember got you so bad, you are feeling frustrated by the pinch of an empty bank account.

Now is the time to get into the right mind frame of being positive and thankful that you at least had money to spend and why gratitude is so important for your business.


Gratitude is a positive emotion that involves being thankful and appreciative

Like we said last week, gratitude is a positive emotion that involves being thankful and appreciative. It stems from recognizing that something good happened to you.

Worrying never solved anyone’s problems. Rather, it amplifies it. Gratitude on the other hand works the exact opposite.

Expressing gratitude has been scientifically proven to have several mental and physical health benefits.

  • It gives you clarity on what worked.
  • Clarity leads to Inspiration.
  • Inspiration leads to motivation.
  • Motivation gets your creative juices flowing and when that happens,
  • you are better positioned to reach your goals.

It’s like a domino effect. When your creative juices starts flowing, it increases your productivity, fosters teamwork (If you have a team you are working with), enhances empathy and reduces aggression.

Gratitude also helps improve your self-esteem which naturally also translates into your business.


How to be Grateful


Life is tough yes but instead of murmuring and grumbling, why not practice gratitude? There is so much to be thankful for.


  • Be thankful for that business plan you had but haven’t yet executed.
  • Be thankful for the fact that even if you don’t have a business plan, you know you need one.
  • Be thankful that 1 person who didn’t know you bought your product, even if it is just 1.
  • Rather than being sad only 1 person bought from you, be thankful that it, in fact means someone out there likes your product. That is your proof of concept right there. Then you can double up your effort to find more people.
  • Be thankful for that repeat customer even if they aren’t yet as many as you want.
  • Be thankful for that knowledge you acquired for your business over the holidays.
  • Be thankful you are still in business.
  • Be thankful for that repeat customer even if they aren’t yet as many as you want.
  • Be thankful for that knowledge you acquired for your business over the holidays.
  • Be thankful you are still in business.

And above all, be thankful that you don’t have all you desire because if you did, what else would inspire you to keep going on? What will the next challenge be?


How to practise gratitude in the workplace


With Customers:

Thanking your customers for patronizing you in the past year is an amazing way to bring in repeat business. However, it should not be done with the intention to get new business or from a transactionary perspective.

You can send out a free gift that won’t cost you much or a broadcast or email message to your core customers to show appreciation. I’ve already created mine to customers on my mailing list and plan to send it out this week.

With Employees:

Thank your collaborators and employees (if you have any) for giving their best to their work despite challenges in the new year.  Simply calling each one to say thank you. Or having a group meeting specifically to thank them at the end of the week.

Or maybe ordering a meal to celebrate the new year or even a bonus at the end of the month if you can afford it.

With Employees:

In fact this is the most important. You have to also appreciate yourself and your efforts to motivate you to do better. It goes beyond self-praise. Treat yourself to a nice meal. Buy yourself something you always wanted. You also deserve to be appreciated for all your work. Without you, all else will crumble.

Learn to show gratitude in the workplace - to your customers, to you employees and also to yourself.

It might be tough to always be grateful but like we said in the Live, at the end of every day or every week, take stock of 3 things you are grateful for and start the new week with what you hope to achieve and be grateful for. Whether we like to admit it or not, everyone has something to be thankful for.

So dear business owner, recognize that something good has happened to you. Recognize that even in the little steps, you have made progress.

Spend a few moments, think about the happenings in your life and your business. If you're struggling with how to start this practice, these free worksheets will help you. Simply download them and start to put them to work asap!

I guarantee you, your mindset will change for the better and you will begin to attract positivity into your life. Is is simply the law of attraction at work!

So... quick exercise. Think of one thing you are grateful for and let us know in the comments below what you are grateful for.

I’ll start with mine in the comment section.

PS:

If you missed the Instagram LIVE Webinar with Hamisha, you can check it out again at this link.

It’s 2022! Happy New Year!

It’s 2022! Happy New Year!

We wrapped up 2021 in style and we are already on Day 4 in 2022! Welcome to the first working day of the year - even though the day is spent already and we are hitting Day 5 already! The year is already going at whirlwind pace!

For me, this year is all about affirmations and self-proclamations!

As I checked out the 2021 Macy's Christmas windows at Herald Square, I was struck by the overwhelming theme of 2021's Christmas windows. It was all about self proclamations and self-belief!

macys christmas window

Others the window with the bear had:

‘You can do it! You are great!’

Which is why for me, 2022 is not about resolutions but about changing mindsets. Self belief is the greatest of it all! Whatever you want to achieve in 2022, believe you can do it!

Of course, I know this is not all up to me. Which is why I made this my affirmation for 2022 and beyond.

So for me, I have it all laid out using Bible verses.

- Map out the vision clearly as stated in Habakkuk 2:2:

Then the Lord answered me and said:

“Write the vision
And make it plain on tablets,
That he may run who reads it.


- Write out the action steps using the 8 pillars we learnt yesterday from our final speaker for 2021, Karishma Chugani, an Integrated Health & Nutrition Expert. If you missed it, you can watch the rerun here.

- Stamp it with self affirmation with Philippians 4:13 backing it with prayers.

- Continue to hold on to the faith as written in Hebrews 11.1:

Now faith is the substance of things hoped for, the evidence of things not seen.

Continue to believe till it happens. Just as it says in this Macy's 2021 Chrismas window display.

macys december christmas window

May 2022 hold the promise we all wish for. Have a fantastic year ahead!

PS. We have great things in store for you in 2022 so watch this space!

Believe in Your Product

Believe in Your Product

A lady chatted me up last week. She was quite discouraged and wanted to abandon her product in favour of what she felt was easier in order to reduce the returned work from her customers. Her confidence had taken a huge battering and she felt it would be easier to give customers what they wanted rather than creating what she loved creating.


I asked her what she felt the problem was and why there were so many returns. And she was honest. The quality of her work was bad.


In my opinion, the solution was easy!


I told her to take more courses and keep practising. In my opinion, she needed to keep practising till she became the best at her product. And naturally, when she believes she is the best, that confidence will shine through and it would boost her sales. In fact, her confidence will be so infectious, it will attract customers! 


If you don't believe in your product, no one else will. And if they don't, you won't make sales, your business will suffer and you will shut down! It is just that simple!


believe in yourself

According to an article by neuromarketing.com,


'It’s a sales maxim that believing in the value of your product or service is essential.

Logic dictates you should believe in what you sell. If you didn’t, sales would become a process of unethical manipulation in which you convinced customers to make decisions they would regret later.'


Actually, some people are brimming with so much confidence even when they know their product is not so great! My assistant told me the story below recently.


A lady bought a really nice product on Instagram but when she got the product, it was far from the picture she has seen on the vendor's page. She requested for a refund but the vendor gave detailed and specific reasons why a refund was impossible. In fact, she tried to convince the lady that the product was exactly what she had seen on her page. She was that confident in her product - even though inferior.


Of course I am definitely NOT in support of her selling inferior products but just imagine how far she would go if that product was actually the real deal! She would have repeat customers and her referrals would skyrocket!  This is the power of Confidence!


ZIG ZIGLAR

If you believe your product or service can fulfill a true need,

it’s your moral obligation to sell it.

Many Entrepreneurs lack confidence in what they do even though what they have to offer is great. Some even find it difficult to display or talk about what they offer to potential buyers and then wonder why business isn’t so great.  Some even claim 'they are shy'. To me, if you are shy, then you are not ready to do business!

If you are finding it hard to make sales, confidence might just be the solution to the problem.  


So what exactly are the benefits of brimming with confidence in your product?


benefits of being confident in your product

  • Confidence helps you sell the product. If you believe in your product and what it does for people, you can sell ice to the eskimos. You will speak boldly about the benefits to the customer till the buyer is convinced and if you deliver what you have promised, they will come back for more. 
  • Confidence also helps you manage objections from customers. You know how valuable your product or service is and can easily defend it. 
  • As an entrepreneur, your goal is to develop interest in your product, know the product and trust its quality. How exactly can you do that if you don't believe in the product or service you are rendering. It is vital to the business that the product isn't ridiculed. State the benefit of your product to the buyer and emphasize what they stand to lose if they don't get your product. 
  • Confidence in your product means you want you product to be perceived in the best light possible. And this is where packaging comes in. Packaging boost confidence. 'Dress' your product or service in a manner that would always attract the customer. It could be your ebook cover, your website landing page, your instagram handle or even a physical product. Awesome pictures of that make-up palette or that jewellery will definitely help you sell the product and make you proud!
  • Confidence it improves your mental health and puts you in a state of tranquility. When you are in a state of calm, you perform better and attract more buyers. 
  • Lastly, when business is tough, your confidence keeps you pushing on because you truly believe in the power of the product to transform lives. 


So, tell me, entrepreneurs. How would you rate your confidence level? Share in the comments below.

If this helped you, please share


Recommended Resources

How to Articulate the Value of Your Product (Effectively) | BNM#11

How to Create Your Ideal Customer Avatar

10 Ways to Boost Sales Online

Dart Manipulation Slash & Spread  | Step by Step Youtube Video

Dart Manipulation Slash & Spread | Step by Step Youtube Video

If you always wanted to know how to manipulate your darts to create beautiful designs, this Youtube video will teach you step-by-step DART MANIPULATION, SLASH & SPREAD METHOD. 

You can check it out here:

 

dart manipulation slash and spread

 

Don’t forget to check out the Pivot Method of Dart Manipulation after this video as well. 

Enjoy this one and please leave your comments. And also PLEASEEEEE SHARE 🙏🏽🙏🏽🙏🏽

DON’T FORGET TO SUBSCRIBE!

How to Sew an Invisible Zipper Step by Step | Youtube Video

How to Sew an Invisible Zipper Step by Step | Youtube Video

If you always wanted to know how to sew an invisible zipper, this Youtube video will teach you step by step HOW TO MAKE YOUR INVISIBLE ZIP TRULY INVISIBLE.

You can check it out here:

sewing invisible zipper

 

I will work on the other videos mentioned in the video and upload them as well.

Enjoy this one and please leave your comments. And also PLEASEEEEE SHARE 🙏🏽🙏🏽🙏🏽

DON’T FORGET TO SUBSCRIBE!

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