February 26, 2014
How many times have we seen businesses over spend money in hopes of making more revenue? In most cases the realization is there every month but poor judgements on part of the business owner result in what is called mismanagement in the business world. It’s usually when a business spends more than what was in the budget. Here are some interesting statistics showing the percentage of business failure within first two years. http://smallbiztrends.com/2005/07/business-failure-rates-highest-in.html.
As a former Banker in Financing for over 20 years, and while having financed over a hundred million dollars to the community, I have also had the not-so-great meetings with business owners, trying to help them get out of business situations that went bad. My observation? Many reasons – hiring the wrong people, making poor decisions, lack of budgeting, putting emotions before common sense/logic, weak strategies, fishing in the wrong pond, and the list can go on. When Businesses deviate from their Business plan they, slowly but surely, find themselves in what I would like to call a “cash flow quicksand”. For example, trying to increase sales revenue without a strong or qualified sales team to deliver, or chasing new orders with lack of funds for production. How does it get to this point? The common problem in my professional opinion is – failure to plan, follow through, and comply — all eventually driving the business into the ground.
Why is this such a common phenomenon in business? Are people just not seeking or getting the right guidance? Or are some business owners too adamant about not pulling out at the right time? Is it because they’re placing the wrong people at the wrong jobs?
This month’s article talks about this very common problem in most small businesses. Loans are given for start-up capital or business growth – “Cash Flow” in both cases, but due to mismanagement, the result can be the opposite, i.e. lack of sales leading to insufficient cash flow to be in business, or even make loan payments. An example of this is one where a client of mine started a business and due to some unforeseen circumstances there were delays in getting a Certificate of Occupancy from the city. This further delayed the opening of the business by almost 6-9 months and ultimately resulted in a disastrous situation. With no sales revenue coming in and the client having exhausted all of their personal reserves, they didn’t have money to make loan payments.
Now that you may have understood some problems we’re talking about here, it’s time to look at some possible solutions.
Dead ends can come up, but true success comes when you are ready to think far ahead. All ideas get old at some point, but it’s crucial to stay up to date with new regulations, trends, and various changes related to your business. Brainstorming on ideas for ad-on services/products or changing your services/products can possibly help increase revenues. If it’s not working out, then jump on to other ideas to make it work! In business there is no end, there are only hurdles. Look at the hurdles, and figure out solutions to work around them.
Money makes money. Put dollars into hiring experienced and focused staff members, but don’t forget to give an opportunity to the new bees. Make sure to invest in some continuous training so they also believe in your vision. Many business owners hire people who they are emotionally connected to— family and friends— just make sure that it makes business sense and isn’t just a favor! Focus on building a process within the company, that means — a method and a team where every member knows their exact role or what they can bring to the table.
Admit and accept a failed strategy in order to make a change. You have got to stop the bleeding. The sooner you realize what it is that is pulling the revenues down, the easier it should be to stop the bleeding. Seek advice from a professional, not necessarily family or friends. See if you can look at a different pond to fish in. Maybe partner with other businesses (B2B- helping customers together) to offer something that they may need; you’ll be surprised of a spontaneous outcome.
Plan out who you want to go after every week. But just having a plan won’t do. The market may be right, but without doing something extra, you’re not really growing. Don’t just pick up business cards or depend on a list of 500 contacts— you have to meet, talk, and hustle. If you feel rejected, don’t worry, that’s a part of business also. Get up, get out, meet people and tell them why you do what you do, not just what you do. Each profession requires a different approach to reach their target clients, and sometimes plans take a while for fruition. While you may never see the results immediately, keep going at it and give it the respect of time.
Yes it is funny, but true. Presumably, we all want to say and do the right thing, and there’s nothing wrong in saying the same thing over and over again, every day, multiple times, to the same or different people. Hear yourself, tweak and polish your presentation, but stick to the core of what you want people to realize. You may sound like a broken record but the truth is when the same people hear you say the same thing again and again, they will eventually realize your honesty, determination and ability that will compel them to connect— thus sales revenue!
Ironically the best salespeople actually don’t sell, they show benefits. Ask around if you don’t believe me. They don’t use a sales pitch. In many networking events that I have attended, I see too many adults using “tag lines” as if they are on TV or a radio commercial. It really boggles me and forces me to question myself, “are we still in freshmen years of college”? That path is a sheer road to failure. In business, those who try to make a sale may succeed in the short run but in the long run people run away from these kind of sales people.
To conclude, the above scenarios have just been some of the very common problems that lead into “mismanagement and Cash Flow quicksand” subsequently. As mismanagement or new management may have led business owners to be terrified of seeking financing, it has created a new area of focus for companies such as EZ Funding Solutions to step in and get behind the numbers to look at the storyline in every business before suggesting financing.
Schedule A Meeting
848-667-9289