Hank Darlington 0000-00-00 00:00:00
Why Some Businesses Succeed And Others Don’t This year marked the 14th annual “Awesome Fishing Getaway” started by Jack Fase, a great friend and the owner/president of Alno Inc. Participants, who are all from the decorative plumbing hardware industry, come to Mexico to the little town where my wife Carol and I have our second home — Los Barriles, Baja California Sur. Past fishing getaways have drawn as many as 30 attendees, but this year there were only 14. That’s indicative of the current economic times. The good news is the gang caught a bunch of fish including marlin, tuna, dorado, wahoo and more. The not-sogood news is that three of the attendees are no longer in business. Two owned decorative plumbing and hardware showrooms and one was an independent rep. Two other owners admitted they were just hanging on by their fingertips. This hit me hard, seeing long-time friends forced to make some difficult business decisions, including whether to hang in there until better times return, or cut their losses, close the business and move on. These decisions are not easily made! Businesses all over the country are facing these same decisions. This led me to reflect on exactly what enables some businesses to survive these terribly hard times vs. forcing others to close their businesses. The past two to three years have been unlike anything most business owners have experienced since the Great Depression. A number of factors contribute to a business surviving or not. The more professional and sophisticated a business manager you are, the greater the odds that you will be one of the survivors. In no particular order, here is an outline of what I believe will help a business succeed or fail. Look closely at each item listed and honestly evaluate whether you are weak or strong in that area. Make a list of your weak areas, put them in order of priority, and then go to work on strengthening them. Your very survival may depend on this. LEADERSHIP TRAITS If you are an owner, manager or supervisor, here are the traits of a good leader: Able to make important decisions Able to stay motivated, even when the business has slow times and is not running as smoothly as it might A knack for organization Good time-management skills Good communication skills Stick-to-it drive that keeps you working long hours until the job is done Good physical health and stamina to survive the long hours and little sleep that may be part of the job The ability to harness and manage anger and frustration Confidence in your skills, knowledge and abilities to run a decorative plumbing and hardware business Able to find answers to questions you cannot answer easily Able to be firm or flexible so you can make adjustments or changes in your plans. Able to do research and weigh options before jumping into a situation or making a hasty decision Able to balance personal and business life I have an entrepreneurial innovation assessment test to evaluate leadership traits. If you want it, send me an e-mail. SKILLS FOR SUCCESS Following is a list of skills that owners, managers and supervisors should have to be successful: BUSINESS PLANNING: Establish and achieve short-term (1-3 years) and long-term (3-5 years) planning goals for the business. FINANCE: Manage money, create and interpret financial statements, develop and update annual budgets, manage accounts payable and receivable and successfully seek out funding sources for the business. ACCOUNTING: Accurately record and interpret the income and expenses of the business in a timely manner (preferably monthly). MARKETING: Identify target markets (both areas and clients) and create a package of products and services that will be attractive to these clients. Know your competition and respond positively to them. SALES: Close sales with clients who have been attracted to the business through marketing efforts, product presentation and services that communicate value. Learn and teach sales skills to all salespeople. ADVERTISING, PROMOTION AND PUBLIC RELATIONS: Create plans, budgets and campaigns that successfully sell your business offerings and attract potential clients. PRODUCT KNOWLEDGE: Know your products and services better than your competition, identify and sell the features and benefits of your company, your products and your services. HUMAN RESOURCE MANAGEMENT: Recruit, hire, train, motivate, communicate and compensate employees. This also includes day-to-day management of the work force and the ability to terminate in a timely and legal manner. WHY BUSINESSES FAIL Just as numerous factors contribute to the success of a business, there are many reasons why businesses fail. I know the current economy has been a major factor in business failures, but there are certain basic principles that too many folks don’t follow that also cause their failures. Here’s a list of why many businesses don’t succeed. How many of these are a problem for your business? What can you do to eliminate them? Running out of money Lack of business planning nefficient control of costs/expenses Lower quality of products and services Insufficient inventory control Underpricing the products and services sold Poor customer relations Failure to promote and maintain a favorable public image Bad relations with suppliers Terrible management Illness of key personnel Reluctance to seek professional help Failure to minimize taxation through tax planning Inadequate insurance Loss of key personnel Lack of staff training Insufficient knowledge of the showroom industry Failure to anticipate market trends Inadequate cash flow Ignoring data on the company’s financial position Incomplete financial records Not knowing how to interpret financial statements Overextending credit Overborrowing Not managing accounts receivable Not managing accounts payable Excessive demands from creditors There are a number of basic reasons why some businesses survive and others don’t! Listed above are some very basic success factors that must be practiced in good times and bad. If you have some weak areas in your business or management style, please start working now to strengthen each of them. It will help you be so much better prepared and positioned when business does come back — and it will!
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