According to www.business.govt.nz approximately one in ten small businesses fail in their first year, and 70% within the first five years. The main reason a business fails is due to poor management (lack of cashflow, no business plan, poor marketing, poor record keeping, lack of financial control etc).
So, what do successful businesses do?
- Place emphasis on cashflow. No cash will send you broke faster than no profit.
- Rather than chase sales, concentrate on measuring profits. Profits are what count, not just turnover.
- Get costing and pricing right! It's important to know how to cost goods and then price them appropriately.
- Know your market. The better you know your clients or customers, the more efficiently you can serve them. Once you know what needs you're satisfying you can price accordingly.
- Monitor key performance indicators. Consult with your accountant about the important benchmarks for your particular business, and then monitor the appropriate indicators at regular intervals.
It doesn't matter whether you're just starting up or you've been in business for ages - you should have a road map that considers the goals you have for your business over the next 2-3 years and the strategies and resources you have in place to achieve these goals. Finally, on a regular basis, ensure you are measuring your success in achieving these goals.
