The headline probably got you laughing because hey! Why would you want to kill your business? Mistakes happen every now and then, and for the most part, resilience can give you a comeback from most mistakes.
But, not for all. Here are some mistakes that can end your business in less than a year, if you make a habit of it. For each of these mistakes, we have recommended a counter-habit which can be the solution.
1. Mixing personal finance with business finance
It is literally a sacred law in business to never mix business funds with personal funds. But somehow, some persons still make a habit of this. It could be making purchases for business supplies together with personal supplies, and not separating the both. It could be in form of making unregulated withdrawals from your business funds. Whichever way you are doing it, you are preparing your business for its final collapse.
This is one habit that directly impacts the bloodline of your business, as we know that cashflow is like the bloodline in your business. Another thing is that this habit makes it entirely impossible to ascertain the financial health of your business at any point. Because even when the numbers are in the red, it is hard to tell if it is the business in debt, or you have projected your bad spending habits onto the business.
Solution: Separate business financials from personal financials from the first day of business operations. If you have not been doing it, start now. If you need to inject in more personal funds into the business to keep it afloat, record it as an investment or a loan. Keep business inflows and outflows strictly for the business. Give the business its independent identity and finances.
2. Ignoring legal consulting
Did you see the recent story about how an entrepreneur narrowly escaped losing N30million by conducting legal diligence on a contract agreement? If you have, then you understand why ignoring legal consulting is inimical to the growth of your business. You cannot afford to ignore legal consulting in your business. From contracts and agreement with suppliers, vendors, clients, partners, and even investors.
It is not about being literate or not. There are legal implications to every action in business, from the first day you resume operations. Without proper legal guidance from an expert, you could sign yourself into trouble, or sign your business into bankruptcy.
Solution: Let the lawyers explain the legal jargons for you, and even if you cannot afford to keep one on retainer, then get one to review your actions every time you want to take a major legal step in your business.
3. Using price as your only competitive advantage
If you want to fail fast, then focus on building a product whose only advantage is Price.
Now, let’s explain how this works. If the only thing you tell your target market is that you offer cheaper products, you will not last long. Why? Competing based on price means that you would have to keep lowering your prices. It is sure to be a frustrating journey because like you may have heard, there is always someone offering something cheaper.
Also, the struggle to keep your price low could leave you running at a loss, or with a very little profit margin more often than not. And if you are not making profit, how long will your business last before it folds up? Not long. Fighting the price war is definitely a sure way to kill your business.
Offer a stronger proposition than cheaper prices. Customers want value. In some ways, customers may consider cheaper products to be of less quality. Offer more value like durability, better customer experience, and other warm feelings that can get customers to take action.
4. Failing/refusing to Delegate
Mr / Ms ‘I want to do it myself’, you do know that you are strangling your business, right?
Refusing to delegate roles and responsibilities is a quick route to burnout, and how can you keep your business alive if you are burned out? When you decide that you want to kill your business, you can start by trying to do everything yourself.
Automate those activities that can be automated. Delegate what needs to be delegated. You don’t need to choke yourself with responsibilities. No one ever won an award for doing everything alone. The important thing is to have a business that can run in your absence and bring in good revenue. If this can be achieved with help from partners and staffs, why do you need to kill yourself with stress?
5. Buying long-term assets with day-to-day cashflow
There are assets and there are liabilities in business. Now, this is not an attempt to lecture you on what an asset is or what it is not. If you are starting or running a business, you most likely already know that. But when you want to buy assets, what funds do you use to buy them? Is it the same cash you need to restock your inventory at the end of the month? Or do you have a percentage of your monthly profit that you channel into such assets?
Do you know that some businesses crumbled during the crypto crash in late 2021 because the owners had channelled funds meant for day-to-day running of business into purchasing crypto assets?
While it is okay to purchase long-term assets like stocks and the likes, be mindful not to do that using the money that you will need at the end of the month.
Your business is in your hands. You can choose to kill it by the habits and daily activities you carry out. You can also choose to begin to counter those habits one after the other, and save your business.