Tuesday, September 24, 2013

5 Ways To Prevent Your New Business From Going Under

By guest author Dave Landry Jnr
Many people are afraid to start a new business. Most of them believe that there isn’t enough money to do so. Those that decide to take the plunge are not sure what to do to keep the business running smoothly. If you have a desire to start a business, do your homework first. Find out the demographics of your target audience. Do a market research to find the demand for your product or service; what people are looking for and how you can fill that need.

Once you successfully start your business, it is time to maintain it so that it doesn’t fail like many new start-up businesses regretfully do. Here are some ways that you can prevent that from happening:

Rent equipment rather than purchasing

This is the mistake most new business owners make. They go out and purchase expensive equipment and furniture that they can rent or lease. When you start a new business, you need to keep most of your money in reserve because you don’t know what may happen. Rent or lease most of the equipment or furniture that you need over a short-term period until you can make a purchase without sinking your business. However, stick to renting or leasing the more costly pieces of equipment.

Outsource rather than hiring

Managing multiple employees in a new business start-up is hard work. It also takes away from other important things that you should be doing to grow your business. Some of the projects that you need done can be outsourced to freelancers or temporary staffing agencies. Try to utilize these services as much as you can. Of course, you may have to hire a few employees, but don’t overdo it. Hiring employees means that you have to pay unemployment taxes, benefits and of course, there will be more personal liability. As the business grows, then you can hire more employees, but start out small or go it alone for a while. Try to delegate the work that you would be doing to the freelancer so that you can concentrate on the daily operation of the business.

Live within your means

Now that you have a new business, don’t think that you can go out and spend big bucks on items that you wished you could have bought before. Try to cut back on big spending. You may also have to put some of the profits back into the business.

Don’t borrow large loans

Many new business owners make the big mistake of getting a large loan from a bank, credit cards, refinancing their homes or from friends or family members. Try to avoid asking for too much money upfront. You will be in debt for the life of the business if you do that. There will be so much pressure to pay back the loan, it can make or break you. A sensible method is to save your money and to use those savings to start your business.

Renting Space

If you can operate your business from your home in the beginning, by all means choose this option. It will save you tons of money. Renting space that you don’t need means that you will be stuck with monthly rent that you may not be able to afford. You will be stuck with a lease that you may not be able to get out of right away, if your situation were to change.

Conclusion

Don’t be scared of starting a business. Not because some people fail does it mean that you will. Be brave, but wise in all of your decisions. Before starting a business, make sure you have a proper business plan in place. This will be your blueprint to have a chance at success. You need to know where financing will come from in the beginning, how you will grow the business and implement a contingency plan for various scenarios that may take place. Study the competition to see how you can make your product or service better for the consumer. Many businesses go bankrupt because of a lack of capital and ineffective marketing. A lot of new businesses fail because there are no systems or goals in place and the business owner has clear vision of the business.
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Dave Landry, Jr. is a start-up business advisor and finance blogger, having done so for close to three years. Dave is also an associate blogger for agencies dedicated to helping people with their financial difficulties

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