Turning Business Setbacks into Momentum
As a business owner you are bound to make mistakes. It is part of the process, just as it is part of life. However, it is imperative to understand that how failures are dealt with determines whether they lead to success or failure, and whether unnecessary mistakes can be prevented from being made.
Even the most experienced businesspeople make mistakes, but with a solid plan and a propensity to learn from experience, new ventures can be built and led to success. And while you cannot avoid making mistakes in your business, you can plan for some of them and try to limit them, helping your business to remain on a firm foundation.
Below we discuss some of the most prevalent business setbacks and how to prevent those in the first place:
1. Preparation and updating of the business plan
The aim of compiling a business plan is to define the key aspects of your organization and thus to guide you through the process of setting up, structuring, running, and growing your business. As for any small business owner, having an unclouded vision for your business is essential to achieve your companies’ objectives. For those with an existing organization we strongly recommend rechecking your business plan on a regularly basis, arranging updates if needed.
2. The importance of research
Research is essential when making decisions for your business and the time and effort you spend researching should be directly proportional to the scale of the decision, considering the current environment, potential costs and risks, as well possible and past outcomes. With the data at your disposal, you are in a better position to make informed decisions, e.g., on staff and suppliers.
3. Slow decision making
As a business owner, you are constantly weighing your options, seeking for the best business choices to be made. From what products to sell, to what prices to charge, to whether to hire new employees or not. Making instant decisions is usually inadvisable, but it is especially non-advisable when it comes to making decisions about employment. Hiring the wrong person can be costly, both in terms of money and time. And letting someone go can be even more expensive and time-consuming. But the alternative – procrastinating on these decisions – can be even worse. Putting off a decision can lead to missed opportunities and lost business.
4. Your Business – a SWOT Analysis
A SWOT analysis, which gives information about the business’s strengths, weaknesses, opportunities, and threats, is an investigation of the divisions of your business, both internally and externally. An eye-opening assessment to determine which practices are working and which are not. Understanding your strengths – the things that your business does well and that give you a competitive advantage – as well as reflecting honestly on your weaknesses as your business’s weaknesses, can help prevent a business setback.
5. Efficient Cash Flow Management
Accurate reporting and accounting are essential to ensuring a healthy cash flow. To keep your business thriving, it is therefore important to understand where your money is coming from and going to. One way of doing so is through a cash flow forecast, which will project your sales and expenditures. The Information compiled can assist you in ensuring that your business expenses will be covered based on the income generated or expected to be generated. Other aspects of managing your cash flow efficiently include:
- setting up an emergency fund,
- keeping your business and your personal finances separated,
- invoicing customers promptly and following up with those who fall behind on payments,
- providing incentives to your customers by offering discounts for advance payments,
- negotiating flexible payment options with your suppliers,
- setting up recurring payments systems,
- eliminating all expenditure that does not add value to your business,
- monitoring stock management including the re-marketing of surplus stock,
- and being mindful of your spending…of course.
6. Thinking ahead – The emergency plan
As a small business owner, it is necessary to have set up a plan B. This is because the risks associated with running a small business are often higher than those associated with larger businesses. Having a plan B gives you a fallback option in case your business encounters difficulties. There are many risks that small business owners face. These include financial risks, such as the possibility of not being able to meet your financial obligations; operational risks, such as the possibility of your business being unable to function properly; and reputational risks, such as the possibility of your business being associated with negative publicity. Having a plan B gives you a way to mitigate these risks.
7. Perseverance, Determination, and a positive Mindset
There are many challenges that come with running a business. It is not easy, and anyone who tells you otherwise is lying. However, it is possible to survive in the business world if you are prepared for the challenges that you might and will face, and if you are willing to work hard to overcome those.
Unfortunately, even the best-laid plans can go awry, and it is important to be prepared for when things go wrong. But, as we know, the best defence is a good offence.
And remember, every mistake is an opportunity to learn and grow.