Monday, May 6, 2013

Causes of Trouble When Starting a Business

If you ever think about starting your own business, well then I salute you good sir, because you are an enterprising individual!  Often times, entrepreneurs don't understand the common causes that may give them trouble in the near future.  When assessing your opportunity for a future business, it helps to know the issues that could cause problems in the future.  With that said, here's a pretty exhaustive list of potential ways entrepreneurs can get in trouble:

Strategic Issues:
1.) Misunderstand market niche
2.) Mismanaged relationships with suppliers and customers
3.) Diversification into an unrelated business area
4.) Mousetrap myopia: Starting a firm around an idea instead of an opportunity
5.) The big project: Company gears up for a big project without first examining the cash flows of the initiative
6.) Lack of contingency planning

Leadership Issues:
1.) Lack of leadership skills, experience, and know-how
2.) Weak finance function
3.) Turnover in key management personnel
4.) Big-company influence in accounting: focus on accruals instead of cash

Poor Planning, and Financial Controls:
1.) Poor pricing, and over-extension of credit
2.) Poor cash management
3.) Poor management reporting
4.) Lack of standard costing

As a potential business starter, its important for you to foresee these issues and approach them head-on.  If you do, your enterprise is far more likely to succeed and may even thrive.

Wonderful Moment of the Day: Spring tulips

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