Let’s face it. Business failures can be catastrophic. They can not only take a toll on your financial stability, but your life as a whole.
And it can be a huge struggle to get back on your feet and gather the courage to start something new that you believe in.
But as we all know, businesses do fail. And they fail all the time. So, how can you prevent yourself from being one of the failed business-owners?
Well, Anand Mishra Star Infranet, a successful Indian entrepreneur, has a bit of an advice on the topic that you may really find useful.
Focus on the Cash Flow
Focusing on the sales or revenues may not be bad, but ignoring the cash flow completely can be a terrible mistake for a new business. An extended period of negative cash flow may mean investors shying away from your business and declining your request to pump in more capital.
So make sure you don’t try to grow faster than your cash flow allows, and keep the expenses as low as you need to in order to stay in the green (or have a positive cash flow!).
Take Your Business Plan Seriously
It’s the most important piece of document for your business, and if you don’t take it seriously, you might as well be setting yourself up for failure.
Make sure your business plan is as detailed – but sufficiently clear – as possible. Include the potential risks and the measure you would take to overcome them.
Avoid High Debt like the Plague
Perhaps the number one thing that kills new business is mounting debt. Many new businesses bite off more than they can chew in terms of debt, and they fail to keep up with the mounting repayment amounts.
It’s very important to make sure you only borrow as little as you need to get your business off the ground, and only do until the point where you’re getting a positive ROI. But that’s not saying keep borrowing more if it’s translating to more in revenues for your business.
You must know where to stop even if the debt is helping your business grow, as even just a year of reduced growth may end up putting your business under great pressure.