Any business, no matter how well it is thriving at the moment, is always at risk if problems are not handled the right way. Every single day businesses must make sure that the right decisions are made in order to survive and grow. A critical mistake at the critical moment can spell disaster for any business. However, even at greater risk are start-up businesses. Start-up businesses are at greater risk because it is during the first two years of setting up a new business that all the problems, whether unforeseen or not, start to come out. It is when these problems must be dealt with at the very early stage or risk losing more money in the end. The usual source of problems for start-up businesses include:
Lack of preparation – As mentioned in the post on Planning to Organize Your Business, preparation and a good system is needed if you want to avoid having problems. By not preparing enough you can face a huge variety of problems such as lack of capital, poor customer demand (compared to your initial expectation) and thus poor return of investment, incorrect pricing, lack of policies to handle management and/or customer-related issues, difficulties with suppliers, deliverers, etc. The bright side of problems like these is that if they are addressed promptly and properly they can be fixed. However, continuing to ignore these problems will lead to even greater problems.
Unforeseen/Unexpected Problems – Despite much preparation there will still be problems that will pop up. These problems are things you do not really have control over and can only be addressed as they come. However, if you really prepare for almost any eventuality then you will have less unexpected problems to deal with. Besides through preparation some of these problems effects can be offset. Some unexpected problems could include things such as a sudden downturn in economy (just like we are experiencing right now), a death or sickness in you or your partner’s family, sudden changes in plans of key personnel (manager, supplier, etc.), and sudden passing and implementation of restrictive laws.
to be continued…
Originally posted on September 5, 2010 @ 9:30 am