Businessses always come and go, One day the store front is a book store, then its video rental store, then a trendy coffee shop, now after COVID-19 it might be a mad max style car design firm. Business always ebbs and flows to the rhymn of what the consumer wants.
Consumers are notoriously fickle. If you want to go out of business, or more like you don’t want to go out of business then these are the 3 things to be aware of. No doubt there are a million more ways to go out of business. But we have to start somewhere right?
#1 Getting complacent in business
The good times are going to last forever, your business is a license to print money and you have no reason to adapt or grow, after all people are always going to want your VCR, Buggy whips, and lead paint right?
Wrong. Consumer tastes change, regulation changes and business changes. If you are not looking for a way to grow or expand or keep an eye out for the next thing. It is going to buy you in the ass. Kodak invented the digital camera, how did that turn out for them in the long wrong? Sometimes you are going to bet on something that doesn’t get popular, but consider it more that you are future proofing yourself.
Now if this new fangled thing doesn’t actually work, or is ineffective, you might consider more about educating your consumer. Some of them are going to buy it anyway. Because people just want the new thing. But over time generally if the product offers no advantages they will come back to it. Except for snap chat, I don’t get that one at all. But maybe I am the wrong generation
#2 Your staff is irreplacable
We have all heard of these saying, my staff are my greatest asset blah blah blah, sure it might be true sometimes. But people get sick, people die, people move on to new things. If you can’t replace a staff person, you will be done for long term. We needed a piece of machinery fixed at our business once. We have used these people for years and the people they sent couldn’t fix it. Eventually they sent in the old owner, who I had met before in other years, to come look at it. They needed somebody who wasn’t even an employee to come fix it! How long can this business possibly last? Maybe our problem was really hard, or abnormal. I don’t know. What I do know is that business long term is screwed unless they find somebody else.
If your staff is irreplaceable, you are going to be a hostage to your staff. Eventually they will decide to get rid of you, and start their own business and throw you to the curb. Why wouldn’t they? Unless you got some blackmail material on them (usually its illegal so I don’t recommend this approach, but it would be effective.) they are not going to stay, if they can be getting 100% of the bill, instead of what… 10%?
#3 Not saving for a rainy day.
If the COVID-19 global pandemic has taught business people anything, myself included it is you need a rainy day fund. Any business who has several months of savings will probably survive this pandemic. The businesses who live day to day are going to struggle, and some of them will close.
This money should be never used, and protected at all cost. Especially during the “Good times”
I use to consider it a waste of opportunity to not invest business money in a good stable dividend stock, and not generation 4-5% off it. I will openly admit I was wrong. Even a bond fund appears to be to risky when it really “hits the fan”. Only treasuries or a high interest account insured by your government would safe money generating asset. As long as your government doesn’t collapse that is.
How can you save money? I recommend taking a percentage right off the top of your operating expenses, setting it aside and never thinking about it again until you retire or stop running your business.
My business doesn’t make enough money to put money aside you cry out. Stop buying that new SUV or switch businesses. If your business can’t make enough money to save for a rainy day, the first rainy day that comes along is going to wipe you out anyway.
Best regards,
Rich E. Cunningham.