In business, good ideas executed badly and bad ideas executed superbly usually have the same outcome: failure. It takes a series of good decisions followed by the proper execution of those ideas to be successful. Any deficiency in execution or the idea ...
In business, good ideas executed badly and bad ideas executed superbly usually have the same outcome: failure.
It takes a series of good decisions followed by the proper execution of those ideas to be successful. Any deficiency in execution or the idea that spawned it can and usually does lead to a failed endeavor.
One only has to look at the statistics of the number of failed businesses versus the number of new businesses attempted to see the dire results. Roughly 90 percent of new businesses never see the dawn of the third year and many close their doors much sooner.
They say accidents occur because of series of unfortunate events and decisions and the same holds true of business endeavors, whether they be a specific business product or an entire business enterprise.
Make good choices
In the case of business however, failure doesn't have to be a series of bad decisions but just one bad decision in a long line of many.
One bad decision in the middle of a dozen correct ones can still sink a good idea. This is why it's tantamount to carefully scrutinize each step along the way no matter how small the task.
Keeping in mind there are very few new ideas in the world of businesses and most are just offshoots of a previous concept, you begin to realize that in order for a business idea or entity to be successful, your customers will have to be stolen from someone else's business.
Sounds harsh but unless you have the rare and truly innovative idea that has never been seen before, your potential customers will be only coming to you because they are not going to their previous supplier.
Since people don't like to change and therefore can be called creatures of habit, convincing them to try your business or product out when they probably have somewhere else they are spending their hard earned money is difficult. This means you have a variety of tasks in front of you.
You have to make them aware of whatever is you're selling and that means there's a multitude of advertising decisions to be made. Fall down here and you're potential customers will never know you or your idea ever existed.
Misprice your wares and although you may have successfully gotten their attention through a successful ad campaign, you'll still lose them when they compare your price.
Vault the adverting and price hurdles successfully yet fall down in quality and you'll have a ton of returns and warranty costs and you'll never get customers to return a second time. Both of which will eventually mean the slow death in the form of a business failure.
Navigate all these waters successfully and there are still all sorts of land mines waiting to blow your business to hell and back.
Cash flow is a huge obstacle to survival and this particular hook snags many novice business owners.
Mismanagement at an operational level, the wrong location, hiring issues or regulatory mishaps can all cause a bleed out and eventual keel over of what once may have been a great idea.
Take your time
The truth is it's very, very hard to start, operate and survive in a successful business which consistently turns enough profit to keep the doors open. The obstacles are many.
The first step in order to have the best chance of surviving is take your time in developing a plan and make sure all your bases are covered as best you can. This probably means do everything in writing and as meticulous as possible.
A good "how to" book is highly recommended for potential new business owners and there are many. Get one and pay attention to it.
And don't rush anything. Like a rushed marriage, there is seldom harm in having patience but there's a potential for a whole lot of harm in store for those who rush into things.
A "how to run a small business" with myself and Machen MacDonald will take place Oct. 24. Call 530-559-1214 to register.
This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. He is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. He can be contacted at 530-559-1214 or SMC Wealth Management, 164 Maple St #1, Auburn. SMC and Cambridge are not affiliated. His website is http://www.moneymanagementradio.com.