![]() “As a business owner, you need a vision,” he said. Shay cautioned against taking a “get out of bed, go to work” approach. But it’s not so simple as ‘I sold five, so let’s buy five more.’” Unless you have unlimited floor space and unlimited dollars, you have to learn how to balance things. “There will come a time when you’re going to go down to the show floor, see something you think is awesome and that you know you can sell-and six months from now, you haven’t sold the first one because you guessed wrong. “Everything we do in business has a seasonality to it,” Shay reminded. This is especially important when one considers the following: īy having an inventory control program in place, business owners should be able to calculate open-to-buy for any given product category for the foreseeable future. How many do I have to buy at a time? Is there a deal if I buy more? What about freight? If I buy a certain quantity, do I get freight for free? And in today’s economic environment, do I need to look at buying lots of it, or buying whatever I can? These things all need to come into consideration.”Ī written long-term business plan that includes a company mission statement and detailed job descriptions for every employee should be considered mandatory for any business, no matter its size. But Shay advised business owners to ask themselves some basic questions: “Here’s what I need. Many business owners don’t believe that they need some sort of inventory control or “open to buy” system. Inventory control is a necessary process. Would-be small-business owners are well advised, therefore, to have enough cash on hand to keep the company going for at least 12 to 18 months to ensure viability during lean times. What happened? There wasn’t enough cash in the checking account.” “Over half of them were actually profitable, and yet they folded. “Of all the businesses in the United States that fail, the last financial statements they issued before they failed said they were making money,” he said. Assuming the role of an imaginary business owner, Shay said, “As long as I have enough products on hand and work to do, I expect to have enough cash on hand in the business.” But then he added, “If only that were true.” To Shay, improper cash-flow management is the leading reason for small-business failures. To avoid falling into the failure trap, Shay advised business owners to keep some commonsense principles in mind when formulating their business plans.Ĭash on hand and profit are 100% unrelated. “Every business I’ve seen that has failed has been a very willing participant in that failure,” he said. Over the course of his ensuing research, Shay discovered some common injuries that befall failed businesses, and practically all of them are self-inflicted. The encounter got Shay thinking of how small businesses fail. ![]() The acquaintance, who’d been the owner of his own company, was now reduced to working as a “consultant” for the same company after having lost everything to bankruptcy and selling off the business. Shay opened the discussion with a personal recollection of running into a long-lost business acquaintance at a coffee shop. Moderated by Tom Shay, a fourth-generation small-business owner and author of more than a dozen books, the webinar covered a variety of topics that included finance, marketing, customer service and employee relations. The reasons may vary between businesses (bad cash-flow management, poor product quality, lackluster customer service), but they can generally be traced to a single source: poor decision-making.Ī recent SEMA Education webinar, “Small Businesses Don’t Die-They Just Make Too Many Mistakes,” explored the many pitfalls that can await the unprepared small-business owner, with expert advice on preventing bad decisions before they happen. Bureau of Labor Statistics, 20% of small businesses go bankrupt within one year, and more than 50% fail within five. Having the proper controls in place can help you anticipate periods of peak and slack sales while maintaining a positive cash flow. So-called “open-to-buy” inventory controls are an essential element of a successful small business. Here’s How to Prevent It 10 Tips for Small-Business Success BUSINESS Most Businesses Fail Due to Poor Decision-Making.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |