Starting a small
business and becoming successful is often part of our daily dream. But there is
a difference between starting a business and building a successful business.
Many businesses fail within the first few years of existence due to the lack of
planning for the long-term. There is not enough vision and there is not enough
done to strengthen the business properly from the ground up.
If you want
to start a business there is an easy way to get a better understanding of why
some businesses fail and others don't. When starting a business think about it
similar to building a house. If done right it is protecting you against any
kind of storm or danger of the outside world and will last for a long time. It
offers shelter and protection. For you and your business that could be
translated to that you want to have a business that is able to weather
economical ups and downs turbulence and that will provide income to pay the bills
(shelter and protection).
When
building a house there are several different steps you need to follow to have
the house built. You know you want a house, but you got to pick a location and
get an architect to plan everything out. In the business world that would be:
you know you want to start a business, but you have to come up with a business
idea and work out a business plan. The next thing for the house would be to
build the foundation (and eventually the basement) for the house. In the
business world - you got to build the initial infrastructure (example:
connecting with vendors, find a manufacturer for your product, create a sales
team, rent office space, get a delivery truck, etc.). Once that is in place you
will be able to actually do business and earn some money. But you are not
completely done yet. You need to build a frame, put in windows and you also
need a roof on house. For your business this means that you pay off debt,
improve business processes and get professional help when needed (example: find
a corporate Lawyer, select an accounting service, etc.). You can get FREE BUSINESS TRAINING HERE...
Once the
house is built you probably want to fill it with furniture and make it livable
for the future. Nobody wants to sleep on the floor, right. Again translating
this to the business world it could mean
that you invest money you earned back
into your business. You buy machinery instead of leasing it. Eventually you buy
a building, hire more staff, develop more products, move into new markets,
build up a high cash reserve, and buy other businesses and so forth. This is
often the step where winners and losers separate. Re-investing money into the
business is a key factor for success. If you go and spend all the money on your
own salary to buy things you have nothing to go back to when the economy slips
into a recession or if disaster strikes.
The
successful business owner has build up a cash reserve or can borrow money from
bank – securing loans with the assets of the business. Going back to building a
house this pretty much matches the same efforts. You pay off your mortgage and
have equity available to eventually borrow against when emergency arises.
Emergencies do not include paying off credit cards to use them again or to buy
a car. To become financially responsible, you should be looking at the long
term and not finance short-term goods with long-term debt.
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