10 Financial Mistakes That Can Kill Your Business in 2020
So far in 2020, 29% of businesses fail because they ran out of cash. That is 9% above the yearly business failure percentage of 20%. Therefore, if you’re about starting up, you want to keep your legs firm and avoid running out of business in the long run. Exactly why I’ve put together this list of the 10 financial mistakes that can kill your business. Each of them is collected from months of study of failed business records so far this year. I also include some of the earliest blunders on finance by business owners that have sent hundreds of brands down the rabbit hole. Let’s get started.
Hiring; Going for Less
It’s one of the primitive human instincts. Going for the easy take. You want to hire those who seem great for the job. Importantly those good with the low-paying job with heavy-lifting you offer. In the long run, they turn out to be less or not productive in the least. Another way that hiring the wrong guys for the job will kill your business is poor teamwork which in the long run will bite into your workflow. Solution? Create a reasonable employment budget to hire experienced workers certified for the job. You may want to up your employment process game as well. This small business holder shares a real-life story and solutions to making a terrible hiring mistake.
You want the best website for your online presence. You spend half of your capital on creating the most beautiful banners, logos, and flyers to put the word out for your brand. And when it comes down to product design and marketing, you discover going out of your budget or getting a loan is the way out. And what’s more interesting? Most of the so-called “best websites” are not all that too great, they may be as beautiful but lack the technical ingredients needed for performance. Therefore, it’s not basically about how expensive your website development is or how much you throw at the web developer guy. Some of the best platforms for professional web developers for businesses include Fiverr and Upwork. And the average cost falls between $5/hr to $160/hr. By the way the top 100 web developers on Upwork charge $160/hr.
Having a Mixed-up Between Revenue and Profit
You are not that too great. But you think you are. Most times you just have to call in an expert to make an actual profit margin of your business every single month. This may incur extra spending but it pays off in so many forms. For one, you’re able to escape the problems of the guesswork and get the actual numbers of your profit. Then again, an analysis from an expert reveals the hidden liabilities in your business. Again, having a full picture and getting your actual profits differentiated from revenue results to a cheat sheet to fall back to for business records. And a business record is a valuable resource for business improvement. Finally, guided decisions for the successful running of your company is only possible with a crystal look of your monthly/yearly income statements.
Not Keeping Financial Records
Balance sheet, cash flow statements, income statements, and statements of changes in owner’s equity. These are some of the 6 basic financial records your business needs to stay alive. But it doesn’t end there. Using them forms a large part of the entire process. Meanwhile, here are some of the benefits of a good financial record keeping. For one, you get to monitor the growth of your business. Then again, making market-oriented policies requires consistent good record-keeping or you end up spending hundreds of dollars later on. Or just end up without one and run your business in the darkroom. Another reason not having a financial record may be a financial mistake that can kill your business is not attaining regulatory compliance.
Short Term Profit Orientation
Great business ideas and revolutionary business strategies are sure to pop-up on your mind now and then as a young, creative entrepreneur. The market looks promising and the demands appear to predict sales coming through the roof in the first week. Inspired to fire, you start-out with no backup strategy. Besides who needs one when you’re sure to reel them in on the first day? Sorry, but it doesn’t work that way. One of the top tips shared by successful entrepreneurs is setting a long term goal. Kick the get-rich-quick scheme idea out of your head. Create a business plan with a backup plan and stay on-course. This way you keep the wavers away, those ready to blow a hole into your bank with their “secret ways to profit on the first-day” books.
Copying The Big Players
Are you Robin the copycat? It’s time you touch the core of yourself and grow through your strengths and weaknesses. The biggest of the financial mistakes that can kill your business in 2020 is copying the big players of your chosen industry. Analyze your strengths and weakness. Be skillful, blend whatever you can from your competitors into your own, but be mindful of your budget or you’ll be out of business in the first 2 weeks.
Creating the Best Ever Product
Statistics show the high demand recorded for the best-selling products this year is not largely a result of how great the product is. Most of the work comes down to your marketing strategy. Nevertheless, creating a good product goes hand in hand with a hard-selling ad and a converting campaign. (Start your email campaign for free with ConvertKit). While you may be obsessed with developing the best product alive and wasting money doing so, you’re also throwing money away for all the sales you could have made from your not-so-great existing ones.
Not Niching Down
The market is massive. Do you feel that urge to dominate every corner at once? Time to slow down. According to experts, businesses that target a specific audience make the most profits. This article on Forbes extensively shows why you must embrace a niche to scale your business. Throwing money everywhere in the market may diffuse your concentration and in the end, you are kicked out of business in week 1.
Not Being Flexible
At times you just have to go out of your way to escape getting crushed by heavy debt. Most oriented entrepreneurs are trained never to blend with the behavior of the market and they miss big opportunities. Take unexpected actions if they add long-term value. Keep your hears to the ground and be flexible enough to run your business in a way that improves customers’ satisfaction. The market is not 100% predictable.
Running out of Cash
Money keeps your business running. It is the reason your staff trades its time. Money is the blood, vein, and heart of your business. Run out of it and you’re out. The most effective way to avoid running out of cash as an entrepreneur is a monthly audit of your business. It keeps notice and alerts you before your CPA gets on fire. Meanwhile, cutting costs and taking long-term loans may be useful when you notice your business running out of cash.
Business ideas, in their young states, are energetic and colorful just like the young entrepreneur. But fleshing one out and breathing life to your business starts the journey. To keep your business running once up, I have listed 10 financial mistakes that can kill your business in 2020. Need to ask more questions? Use the comment box.