How to Prevent a Business Failure in the Jansan and Packaging Industries
In an earlier AFFLINK KnowHow, we mentioned that 80% of all new businesses fail in their first year. This happens due to cash flow problems, ineffective marketing, and the entrepreneur’s own fear about succeeding.
"Now we need to discuss ways to prevent business failures," says Michael Wilson, senior vice president of business development at AFFLINK. "Some of these we have already discussed, but others are new."
Among Wilsons's suggestions to prevent business failures, especially in the jansan and packaging industries, are the following:
1) Have a business plan. Many new companies do not have a business plan. They plan to learn by doing. However, according to the Harvard Business Review, entrepreneurs with a formal business plan are 16 percent more likely to succeed. View the business plan as a road map to growing your business.
2) Master money management. Many entrepreneurs are visionaries. Money management bores them. But they must focus on how much money is coming in and how much is going out. They should also have a cash reserve of at least three to six months for operating expenses.
3) Monitor employee performance. Evaluating employee performance is complicated for a new business. To address this, set clear goals of what is expected of each employee in every position. Invest in employee training and development and conduct regular employee evaluations. These evaluations help the entrepreneur better understand how to monitor employee performance.
4) Keep your eyes on the future. Many new entrepreneurs focus so much on putting out fires and daily tasks they don't see new opportunities changes in the marketplace. Kodak is a perfect example. They were the first to develop digital cameras but did not expect the market to take off so fast. Being unprepared allowed other companies to take the lead. After 143 years in business, Kodak declared bankruptcy in 2012.
"We can list other reasons why new businesses fail," adds Wilson, "but invariably, it comes down to a lack of planning. To survive, have a plan and focus on the future."
W. Michael Wilson is senior vice president business development/packaging at AFFLINK, LLC. He can be reached at 205-344-4185.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
