Have you noticed that lately I've been blogging a lot about money and finances for small business owner? It's because the number one reason small businesses fail isn't a lack of passion by the owner, it's a lack of money in their pocket. I've seen small business owners who have a very low net worth get into debt that a millionaire would have trouble getting out of. It's a waste. It's a waste of their financial future, and it's a waste of a valuable product or service that could help others.
There are 3 main reasons small business owners often lack cash flow.
- They price their product or service too low, trying to catch a “broad” market. Instead they catch no one, or else they catch lots of customers who don't value their time or product and don't pay up.
- They have used credit cards to get started in business (which might be OK up to a point) and now find themselves working to pay creditors instead of working to pay themselves. They can't grow fast enough to overcome their debt, and their worry about it causes them to lose focus on their business. Bad news.
- They don't understand and closely watch their cost of doing business (overhead or operating costs). This will kill a small business owner faster than just about anything else. If someone tells you that you can open a business for $100 total (and those people are out there, for sure) run the other direction fast! To open a LEGITIMATE business you will definitely spend more than $100. Think about licensing, permits, merchant account fees – you've spent more than $100 on that alone and you have not even opened your doors or launched your website yet.
Can you open a business without huge dollars backing you up? Yes, you can. But you can't open a business for free. Not understanding that fact causes people to jump in too fast and sink before they ever even swim.
Ask yourself these 4 questions:
- What’s your picture for your life right now and as you get older?
- What’s your business model and does it support your picture?
- How can you lower your costs of doing business?
- What is the fastest path to increasing income right now?
If you need one-on-one help from me to settle these questions, check out my coaching program options: