The road to bankruptcy and how to avoid going down it!
Last year I told someone I know that his business is going to go under. It was obvious to me and though he accepted my prediction (somewhat), probably not so obvious to him. In a recent conversation, it has become apparent to me that he is in fact actually bankrupt - and now, clear to him.
The sad fact is that he really did not need to reach this stage. But much like 90% of entrepreneurs, this stage is inevitable, if not at first, usually within a few years. Part of where he went wrong:
1. Don’t give very important stuff to someone not as qualified as you.
2. DO delegate, but delegate the crappy stuff that you are not good at or take your time.
In his case, much like many others, he fell for the “we are an expert advertising agency” and gave the juicy stuff to them. What does a silly kid in his 20s know about YOUR business? Take responsibility. Don’t think someone is going to come and save YOUR business.
3. DO NOT bring cash from your personal or other businesses into your main one that may be failing. You can do a short loan if it will buy a bit of time, but constantly mixing them means the main business is not making money.
4. If you are living off credit or keep asking for more, you are on the wrong path. A business has to pay for itself and then some.
5. Do not live beyond your means. Do not compete with others. Only compete with yourself. If you are not making money, don’t put your kids in private school. Don’t go on holidays. Don’t buy crap you don’t need.
6. Take time every day to enjoy life a bit and clear your mind. A clear mind makes better decisions.
7. Don’t forget taxes. You have to put aside money for taxes, so they need to be in your business plan.
It IS possible to save some sinking ships. How? By doing the opposite of what you have been doing wrong!
The most important factor is the captain of the ship - that is you. If you don’t have that fire in your belly, forget it. If you do, then everything is salvageable because the mind is a powerful tool that can achieve anything.
The sad fact is that he really did not need to reach this stage. But much like 90% of entrepreneurs, this stage is inevitable, if not at first, usually within a few years. Part of where he went wrong:
1. Don’t give very important stuff to someone not as qualified as you.
2. DO delegate, but delegate the crappy stuff that you are not good at or take your time.
In his case, much like many others, he fell for the “we are an expert advertising agency” and gave the juicy stuff to them. What does a silly kid in his 20s know about YOUR business? Take responsibility. Don’t think someone is going to come and save YOUR business.
3. DO NOT bring cash from your personal or other businesses into your main one that may be failing. You can do a short loan if it will buy a bit of time, but constantly mixing them means the main business is not making money.
4. If you are living off credit or keep asking for more, you are on the wrong path. A business has to pay for itself and then some.
5. Do not live beyond your means. Do not compete with others. Only compete with yourself. If you are not making money, don’t put your kids in private school. Don’t go on holidays. Don’t buy crap you don’t need.
6. Take time every day to enjoy life a bit and clear your mind. A clear mind makes better decisions.
7. Don’t forget taxes. You have to put aside money for taxes, so they need to be in your business plan.
It IS possible to save some sinking ships. How? By doing the opposite of what you have been doing wrong!
The most important factor is the captain of the ship - that is you. If you don’t have that fire in your belly, forget it. If you do, then everything is salvageable because the mind is a powerful tool that can achieve anything.