Running a small or medium scale business for over two years has been described by many economists as the business being a future success. Most of the business magnets and economists are of the view that small to medium scale businesses that are able to survive the first two years of business, will most probably be a successful one. But, almost 80% of such small to medium scale businesses close down before the two year mark!
So what are the ways that you can save your business? Well, here are some to help you out!
Studying market reactions
In order to survive in a market you should know the inside out of the market! You should be able to predict accurately what would happen if there was an action from your business. In order to be able to foresee or predict a market reaction, you should some very intensive study of the market and other similar ones. Always make sure to do test marketing before going ahead with any of your new ideas. As most of the time, test marketing has enabled business owners to make better and much brighter decisions in relation to their business!
If you want to expand your operations before even two years of opening, then you will need to take every precautionary measure as possible. For instance, instead of sensibly choosing a service office to locate your business premises, you plan on going to your own building (rent or purchase) by paying huge sums of money. Only to later realize that you have blocked finances that could have been used in much more fruitful manner. It is indeed excellent to expand business operations. But you should always know when to do it!
Know about liquidation
Most of the amateur business owners are unaware of the problem of liquidation. Which is when although a business may be showing huge profits on the books, but cannot continue to operate because it has no finances to run the business. This is a result of improperly handled finances. It is very common in small scale businesses that are owned by sole traders, as they tend to pull-out capital for personal uses as well. Other than that even reasons like low rate of debtors’ turnover or receivables ratio indicate that the business is not collecting their receivables in a timely fashion. There by causing the business to fall back on finances in hand and leaving the business unable to even maintain its working capital! Whether you are located in a coworking space KLCC or a single storey building if you are unable to manage the business finances properly, you will not make past the two year mark!
Competitive advantage is very important topic that every small and medium scale business owner must know about! Because it will lead them to surviving the harsh business that they will inevitably have to face. You should always look for ways to gain a competitive advantage over your competitors to survive in the business!