In the 1970s, freshman graduate Fred Smith founded a new delivery company called FedEx with উত্ত 4 million in inheritance and $ 80 million in loans and investments.
Just three years later, Smith’s new company was Flandering.
With only $ 5,000 in the bank and a total of $ 24,000 in fuel bills, the future did not look bright.
So, what happened?
In a moment of insanity (or business brilliance), Smith picked up a taxi at the airport, bought a ticket to Las Vegas, and headed straight for the nearest Blackjack table. At the end of the night, he increased the amount of his stack and won enough cash to keep FexEx running for another month.
It has grown rapidly over the decades and FedEx has become a global delivery powerhouse, employing over four million people and processing 13 million shipments per day.
Now, the point of this story is not to legitimize gambling as a fundraising strategy. (Seriously, don’t try to copy Smith’s success.)
The point is that even exceptionally successful companies go through difficult times and carefully return to their profits.
This article will share four tips for new business. If you address these issues, it will be easier to keep your business on track and follow FedEx for global success.
Don’t ignore credit control
Startups and small businesses really struggle with asking their clients and customers for payment.
It can hit you as weird. Small, cash-involved business No. Ask for payment? Really? Well, yes and there is a very simple explanation for that.
Small businesses usually have very small employees and since they have small employees, employee members usually take on multiple roles. Perhaps the most common role I see in doubling is sales and credit control.
It’s only two steps of the same process so it makes sense to stick to the roles, doesn’t it? No.
Asking a person to build a relationship with the customer and chase them for money after closing the sale creates quite a confusing relationship.
Often, salespeople will ignore the credit, feeling that their work is already done. If left unchecked, poor credit control can and will destroy your cash flow and potentially your business.
The simplest solution to the problem is to completely separate the two roles. Work one employee with sales and the other with credit control and set those roles apart.
However, many small businesses simply do not have the budget to create a dedicated credit control role.
For this business, there are some general tips to actually follow the loan.
First, when you write credit terms, make them clear, strong, and consistent. When a customer agrees to your terms, they should know exactly what they need and how the agreement applies.
Second, put your business at the top of the credit line. The stark reality of the business world is that lenders who shout louder and tend to pay first for the longest time – usually at the expense of a quiet company.
If you want to pay first, it’s important to schedule follow-up with your customers to remind them of any upcoming shipments.
Third, if a customer does not repay their loan, it is important to take action and not let it slide. The most effective tool you have is a very simple – phone.
Phone calls are hard to ignore because they are literally ringing on your desk. And if you get to answer someone, you are talking to them personally, which again is very difficult to ignore.
Don’t rely on email or snail mail because your creditors will mark it as unread and close it for another day.
Time for more technical advice. Forecast. Forecasts are important and useful tools for virtually every business, helping business owners understand where they stand now and where they will be in the future.
Unfortunately, many business owners believe that the forecast is a one-time deal. When they write their business plans they set their forecasts back and then never look at them again.
This is a huge mistake.
Forecasting is a living document and, like all living things, requires love, care and attention.
As your business grows and develops, you revisit your forecasts and update them based on what you’ve learned. It keeps them as relevant and effective as possible.
For the practicality of designing forecasts, you should always base your predictions on past data. If you haven’t hit specific performance metrics before, why do you think you’ll hit them in the future?
If your predictions show unreasonable effectiveness, it’s time to revisit the data and create new predictions.
Now, why do you think forecasting is really important and this is a very good question! What good does a good forecast give you over a poor person?
Accurate forecasting gives you a clearer idea of where your business will be in the future, which allows you to plan accordingly. Having a cash flow problem on the horizon? Do you have enough cash to bring in more staff? And so on and so forth.
Forecasting allows you to measure your performance by comparing forecast sales with your actual sales. If there is a discrepancy between the two, you can separate the problem and solve the problem.
Ready for the unexpected
In the business world, things rarely go unnoticed. Just think of Fred Smith and FedEx. Do you think he ever plans to rely on gambling money to fill a funding gap? Of course not!
The reality is that things don’t go as smoothly in the real world as they do in your business plan. So it pays to be prepared for the unexpected.
Unfortunately, new business owners assume that everything will run smoothly and there will be absolutely minimal budget.
When something goes wrong (and something goes wrong), idealistic business owners suddenly rush into disaster without cash or resources to adapt and survive.
The solution is simple. Assess the risks and build a shaky house where you can afford it. If things start to go wrong you will be grateful that you are ready for it.
Get help when things go wrong
When someone starts a business, they often jump into a million different roles in the first few years. It gives birth to the mentality that they do not need help and they can do almost anything by setting their mind.
This mentality works but only to a point.
If your business starts to struggle, you don’t have the opportunity to spend months learning about recovery strategies. Within a few months, your business could spiral into a downward spiral or even close.
The more time you give to a business rescue professional, the better the chances of a successful rescue.
So, don’t bury your head in the sand, don’t double down on risky gambling and don’t get confused about when you don’t know what to do. Go get professional help.