Once again many of these seem quite obvious but they are well worth reviewing.
A business becomes a self sustaining entity. In order to become self sustaining certain fundamentals need to be in place.
- The business needs to spend less than it earns and save a little.
This is the difference between profitability and unprofitability. Ideally the business should also be able to set aside a portion towards savings so that it can cater for unforeseen expenses that will arise in the future. Savings are not always placed in a bank. In some areas with high inflation or unstable banks alternative methods of saving should be explored.
If this business cannot accomplish this basic then it will not be a success and is not reasonable to pursue.
- Debt can cripple the best of businesses.
It is wise to avoid debt wherever possible but where business dept is necessary and manageable it can be a helpful tool in growing your business.
- Insurance can provide a safety net.
Depending on the risk levels and nature of your business and if appropriate and scrupulous insurance mechanisms are available, insurance can mitigate high risk levels. For an individual business owner health or disability insurance can assist in mitigating loss were one to become seriously sick or disabled. Key personnel in a business can be insured to enable the business to continue in the event of some unforeseen human resource issues.
Having said this insurance premiums can also be an unnecessary burden so insurance requirements need to be evaluated carefully and adjusted regularly.
- Planning is key
Some of us can get by in life by "winging it", for most of us it's best to plan things. The same is true of business. Especially as the business grows and becomes more complex failure to plan could lead to significant difficulties.
A basic business revolves around four key areas:
- customers
- costs
- sales
- profit
Our planning should focus on all of these areas if we are to be successful and we will delve into each of these areas in more detail in the future.