Many companies start out with a bright outlook. They operated very well in the first few years then suddenly reported difficulties from nowhere. If they pass, they will still be "stunted". What are the mistakes that entrepreneurs often make?
According to statistics from market researchers, many businesses do not have the opportunity to celebrate their second birthday and are "killed" within the first year of operation. The marketplace with its harsh rules of the game never shows mercy to "innocent" businesses.
To be able to survive longer in an increasingly fierce competitive environment, young businesses should pay close attention to avoid falling into "traps" that lead to mistakes in operations and development strategies.
Trap number one: Paying too much attention to customers without paying attention to financial issues
There are many businesses that fall into bankruptcy simply because they focus too much on revenue and neglect business management. To avoid falling into this situation, you should create a tracking sheet to easily check weekly. This tracking table must at least include revenue, profit margin, budget, quantity of goods sold, costs... Each quarter you need to check how customer demand is growing to have the appropriate supply level. Have you analyzed your customers' potential needs? Do you have a good distribution channel? Is the price competitive with the market? Regarding finances, three questions to ask are: what do I have to collect, what do I have to pay and how much money do I have left in my account?
To do this, you should hire an experienced accountant. They will help you detect abnormalities in financial matters to warn you promptly.
Trap two: Not daring to negotiate with creditors
In case of financial difficulties, many business owners do not dare to negotiate with the bank to lend them money, forgetting that if their business closes, the bank will not be able to get the money back. get a loan. This means the bank is usually willing to negotiate with you.
Third trap: Weakness in analyzing customer sources that pose a risk to the business
There's no point in chasing after a contract you can't pay. Therefore, the most important thing is to understand the customer's financial capacity. However, when you unfortunately encounter bad debt, you can ask for help from legal agencies or professional debt collection companies.
Fourth trap: Depends on the customer
Sometimes, businesses go bankrupt because most of their revenue depends on a certain key customer, and when this customer switches to using the services of another provider or falls into bankruptcy, they immediately go bankrupt. That means they will suffer as well. To avoid this risk, you need to diversify your customer base and clearly determine that the profit from one customer cannot account for more than 30% of the company's revenue. Ideally, customers should be diversified by business type: one-third are large businesses, one-third are small and medium-sized businesses (the most loyal customers) and one-third are small businesses. other unit.
Fifth trap: Ineffective investment
The rush of orders can cause business owners to invest heavily and recruit employees massively while not taking into account their financial potential as well as the ability to recover capital in the long run. This is one of the most classic causes of failure but also the "trap" that many businesses fall into. An effective way to prevent it is to research the market carefully and seriously to have an investment direction that suits your abilities, so you don't get confused or overwhelmed when many orders come in.
Sixth trap: Doing business as an individual
Some businesses cannot survive if they stand alone, without access to organizations that bring them customers or without contact with consultants who can receive useful advice. Depending on the type of business product, you can join different associations and link up with other businesses to take advantage of their distribution systems and also exploit their customer sources.
Trap number seven: Not paying attention to insuring your products or services
Many businesses are not optimally insured, so when problems arise, they cannot manage them alone. Insurance is a way to protect yourself and also share risks with other businesses, so you need to learn about forms of insurance to be able to make the wisest choice.
According to Kinhdoanh
