You must have this at the back of your mind: every business is a risky venture, and to maximize profit, you must control your risk probabilities and minimize every possible cost.
In this article, I will be sharing what I may tag my life experience in business and how you can leverage on them when building your own business, and mistakes you should avoid as a start-up entrepreneur.
- Never Approve any Financial Transaction on Promise/Trust.
Being new to business, you may be tempted to believe everything: from what you heard from your supplier to what your friends/families must have assured you about the business.
But in business world, there is nothing like promise or trust, instead what you have is terms and conditions, and profit and loss.
When you carry out your business on trust, you stand a higher risk of losing both your money and whatever relationship you share with your client.
For every Cheque, transaction, and monetary expenses, please have a written agreement of your terms, conditions, and legal implications of such transactions. It is always safer to protect and preserve your business with a written agreement than to exchange words and curse your client for a trust-based business gone wrong.
- Never Run your Business without Proper Documentation.
You will always have brilliant business ideas, and wonderful business inspiration, but the very moment you want to turn such ideas into a business where people can patronize your services or products, please, by all means have a well documented business portfolio for your business.
If you do not want the government to pull down your sweat or for you to lose your millions in a legal lawsuit with your client, then you must by all means have all the necessary documents and approval before starting your business.
- Never Run your Business on Credit.
Every start-up business will always face the challenge of trying to win customers and make profit. Sometimes some business owners will sell their products to friends, relatives and families hoping that they will pay later or that they will win their patronage.
The reality is that it takes more to recover money than it will take you to put the right policy in your business. We all need customers/clients but nobody needs debtors in their business, so if any of your client can’t pay for your product or service, then do not sell to the individual.
Tons of businesses have shutdown as a result of debtors who never paid for the service or product they got or used. You may wish to take this point very very serious.
- Never pump-in all your capital at the start of your business.
Apparently you heard that business A is profitable and boom you invested everything in the business so that you can make maximum profit. Well, I have some bad news for you; this is exactly how many investors became bankrupt for life.
Every business have stages─ spudding phase, consolidation phase, and the expansion phase ─ and you must monitor your growth indices and take adequate risk measures before determining whether to invest more or to maintain what is currently in existence.
Why do I suggest that you do not invest all your funds in a particular business? The answer is simple, every business is dynamic, and your predictions today may be right for one month but may fail after two months of operation.
The best alternative would be to invest 25% of your capital, then increase the capital only when you have a strong and positive profit indicators.
- Never run your business with incompetent hands.
Business is a fierce battle, battle against loss, failure, competitors, government policies, and forces of demand and supply. And no matter how wonderful your business ideas might be, there is someone somewhere plotting something better to take your clients or improve on your services at reduced rate.
Anyone who entrusts their business to someone who is not competent; someone who is not committed to the business; or someone who has a poor customer relationship, is most definitely joking with his or her business.
Business doesn’t respect any degree or faith but principles of wealth creation. If you joke with your business, you will lose your clients, funds, and your integrity as an individual.
This topic is vast, but I shall continue to share tips that I believe will guide you as you navigate through the rough path of setting up your own business.
I must congratulate you for your bravery and courage to tow through this path, and I can guarantee to you that you will smile someday in future.
Always remember, the economy belongs to entrepreneurs; and the world awaits your business ideas.
Till I write to you again, keep checking this space for business tips for your business.