Friday, September 4, 2009

Do You Have What It Takes To Succeed In Business

Running a business is tough. Most small businesses go bankrupt, or are closed abruptly in the first five years of operation. Over the course of the next five years, many of the survivals also shut their doors for good. Why do many small businesses fail?

Several reasons account for why many small businesses fail:
  • If the owner is not sufficiently motivated to make the sacrifices necessary to make his/her business thrive, then s/he will be at a disadvantage to business owners who are highly motivated.
  • Unless the owner is an independently wealthy person, s/he will have to find money from somewhere to run the business. Normally s/he will seek the money from a bank. His/her credit history will play a big part in whether or not s/he secures a loan from the bank.
  • The owner’s willingness to sacrifice time, money and happiness to succeed. Often times, new business owner thought they could handle the hardship and sacrifices involved in running a business, but once the excitement of ‘being your own boss’ wears off they find they are not up to the task and close their doors.
  • Without customers a business cannot make money, and without money you cannot remain in business. Certainly, customers are the most important component of a business.
  • A good customer base is essential for a successful business. Knowing your customers and developing a psychological profile of them gives you the tools to deliver targeted advertisement to places where they frequent. To keep your customers happy, devote adequate time and resources to the quality and delivery of your product, and effective after sales services.
  • Even though you may have the best product in town, if your price is too high, you will force your customers to look for a lower price substitute to your product. Let your price be competitive to the prices of similar products on the market. Keep in touch with your customers by email or regular mail to inform them about new products and discounts on existing products.
  • The difference between costs and sales determines whether your business fails or succeeds. Finding an appropriate method to reduce cost is important. Periodic review of the costs of raw materials, labor, office and other essential supplies and services in relation to total sales will highlight specific areas where costs can be reduced.
  • Encouraging improvements in business operations can also reduce costs. Up to date and proper record keeping involving taxes, accounting and scheduling of workers will promote the success of your business.
  • Depending on the size and nature of your business, it may be necessary to consider a small business consultant to assist in developing a suitable business plan, and also to coordinate the various components of the business toward success.

Before starting a new business, seek professional advice on the business you wish to invest in.

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