Bob Younce is a professional copywriter and entrepreneur who loves helping other businesses shine. Visit his website or his blog for more information.
It’s an all-too-common tale. You’re talented; you’ve got a big idea; you’re good at what you do, maybe even the best. You develop a handful of clients, hang a shingle, and get busy doing your thing. You know it’s going to be a long road, but you can feel success with every nail you pound, every yard you landscape, or every widget you sell.Six months go by. You’re still out there working your butt off, but your financial reserves are almost depleted. You think you’re making a profit, yet your bank account stagnates. Six more months, and you’re taking down that shingle.
Failure happens
This happens to around a third of all new businesses. Within one year of opening their doors, they fail. We’ll let you in on a secret: the vast majority of small businesses don’t fail because they’re not good at what they do. Some of them are the best in their field. No, most often, small businesses fail because of a lack of business sense.
Doing business by the numbers
Small business rises and falls on its ability to make money. How good your idea is has little to do with whether you succeed. You need to be able to make a profit on that idea. What does that mean, in practical terms? It means you need to address three key areas in those early days of your business, or else you’re going to tank:
1. Don’t ignore the accounting function. It’s not sexy. In fact, to most of us, it’s mind-numbing. Still, it has to be done. You need accurate financial records in order to be able to monitor your business’ health. Without reliable Profit & Loss statements, for example, you can’t be certain how much, if any, your business is really profiting. Outsource it if you can, do it yourself if you must, but do it.
2. Beware the tax man. If you deal in inventory or real property, or if you have employees, your business is ripe for tax issues. Even a sole proprietor in a service business needs to be aware of his tax situation and be ready to address it on a quarterly basis. More than one small business has folded after discovering they owed their entire first year’s profits to the IRS.
3. Evaluate, evaluate, evaluate. Your small business needs to have goals. They need to be measurable, and realistic. They should encompass areas like sales and productivity, but ultimately they need to come back down to profitability. You need to set short- and long-term goals and evaluate your progress on a regular basis. You need to look at your various marketing campaigns, and see how truly effective they are. You need to look at vendor contracts every year, and see what changes can be made in your favor. In short, never settle for the status quo.
You’ve got a big idea, and that’s a big prerequisite to success. Now, go out there and turn that big idea into something profitable.
