The increase in unemployment and massive layoffs have stricken panic in the heart of many employees. To solve the issue, many of them have come up with fantastic ideas and went ahead to start their own creative businesses. In a couple of months or years, the business begins to struggle.
They have a pile of bills to pay, no money in the bank, creditors are calling, customers are complaining about orders and workers are resigning on their own accord. Before they realize, the business which started as a labour of love becomes boredom and source of a constant worry. When times are tough, many business people coil in their shells, talk to their friends and family folks.
Nothing really happens, it rather moves from frying pan to fire! At this time, many lose hope and give up the fight. Instead of consulting with an expert business consult like Teca Cameron-Tackie to help troubleshoot the problem and solve the problem, they throw in the towel.
Well, if you are in that condition! There’s hope!
This article will show you exactly why you are struggling in business and how it fix it.
But first, let us look at the statistics and see the major reasons why many businesses struggle. According to a report by Jessie Hagen of U.S. Bank, cited on the SCORE/Counselors to America’s Small Business, the following are the main reasons why many creative businesses fail:
When you look at the top of the list, lack or insufficient cash flow is the No. #1 reason why businesses struggle to survive. But, the fact is that lack/inadequate cash flow is rather a result than a problem.
When business owners fail to seek help from experts such as seasoned business coaches, develop a well-researched business plan, market and sell to drive revenue, set profitable and attractive prices, and many others, the ultimate result will be lack or insufficient cash flow. Your financial statement is your scorecard. It shows how well you are managing and running your business.
Cash flow problems are the result of not managing your business well. If you are currently struggling in your business, there are a set of things you need to do turn it around. When you take these things seriously and work on them, you will see things changing in a couple of weeks and months. And your business will become to booming with robust cash flow.
Most people start and operate a business with an employee mindset, instead of an entrepreneurial mindset. They seek security instead of freedom, busyness instead of productivity, wait to be motivated instead of being self-motivated, and focus on steady income instead of generating profit.
Employees don’t have to worry about their salary too much. All they have to do is to show up for work, do what they are told, get busy at work, and play by the rules. Once they do this, their salary is assured. They also get to receive sick pay, sick leave, bonuses and many others.
Once you become an entrepreneur, you need to understand that you have come into a different kind of world. What made you successful as an employee on the corporate ladder will not make you successful as an entrepreneur. You have to change your mindset and start thinking more like a business owner.
Management guru Peter Drucker said, “The sole purpose of a business is to make and keep customers!” If you don’t have customers, you have no business. And the way to get customers for your business is to invest in marketing and selling. If there are loopholes in your marketing and selling strategy, you are not going to make and keep customers. That means you will fail to make money.
In business, sales equal income. The more sales you make, the more money comes in. If you’re not making money or making less of it, the very first place to look at is your marketing and selling strategy. Who is your target customer? What are their problems? What makes them the ideal people for your products and services? Is your pricing attractive for your target customers and at the same time profitable for your business?
What about your lead generation, lead conversion and client fulfilment system? Do you have a predictable, bulletproof system to generate leads and sales for your business? What is your conversion rate? How many of your leads are converted into sales every month? If you have no answer to these questions, you have to sit up with your business partner or business coach to develop winning marketing and selling strategy for your business.
It is one thing to get an order and another thing to fulfil the order. If your marketing system is generating leads and customers for your business, then you need to develop an efficient operating system that ensures you deliver to customer’s expectation. Leadership mogul, John Maxwell said, “Good leaders organize so that they don’t have to agonize!”
Well, if you don’t organize your business, you will have to agonize. You need to sit down and start creating systems in your business. Create and document systems to fulfil customer orders excellently and on time. Train your team to follow these systems to deliver orders until they get used to them.
Organizing your business around systems that help you to save time and money as well as reduce stress. Create specific roles, policies, contract documents and working agreements for all accountabilities in your business. Take a helicopter view of your operations and make sure you organize every area of your operation causing a lot of stress and anxiety.
Many small business owners think that they can keep the books themselves. One person does the marketing, selling, customer service, operations and keeping of the books. In fact, they get so busy that they fail to keep the books. Since they are not keeping track of their cash flow, they fail to see flaws in their cash flow management system.
Profit is not cash flow. You can generate a lot of sales, but if most of them are in account receivables, your business will still have negative cash flow problems. You need to shorten your cash cycle. Take discounts or reduce the time your customers take to pay for your creative services. Charge a price that ensures you have enough money to cover your operating expenses.
If you are not keeping the books and keeping track of cash flow, you will be in the dark as far as your finances are concerned. You’ll find yourself working, but barely trying to survive with no income set aside for savings and investment to grow the business. Consider taking a course in accounting, get a bookkeeper and start engaging in weekly health check to manage your cash flow effectively.
As a creative entrepreneur, you are the boss. You control your own time. But if you don’t know how to manage your time well, you will end up looking for another job again. You need to master the art of goal setting, time management and delegation.
You need to set and achieve goals for your business; yearly, quarterly, monthly and weekly goals. As your business grows, it is important to outsource or employ additional talent to help with what needs to be done. Delegate low-value tasks and focus on high-value tasks. Ensure that all your people have the required skills and expertise to get the job done to the required standard.
Too much success can also make a business to struggle if it’s not well handled. To make sure your supply muscle is proportional to your demand, you need to train, equip and delegate people to do what you are weak at. Do a SWOT Analysis, find the areas that you need help, get the right people, make sure they have been put on the right seats and then drive the business forward towards growth.
Also, consider adding a business coach or consultant to your team to help keep you on track, motivated and inspired to achieve all your business goals.