Quite contrary to the popular approach of taking an aggressive step towards growing the business, a few industry experts suggest slowing down. Especially in small businesses, where the finances and the resources are limited, it is necessary to be extra cautious not to ruin everything before a start.
Here are a few excellent tips which can judge if your business idea is worth a try. There may be instances when the idea fails, but each failure will have a lesson to comprehend. While some entrepreneurs will stop then and there, many of them will learn from the mistakes and move ahead with a refined approach.
Restrict The Failures:
If your start-up is not going as per the expectations, or is showing the negative figures indicating more liabilities than the assets, do not expect a sudden miracle. It is good to fix a time frame, ideally a few months, to assess the business. If the performance is not good, try to move out of that, restricting the losses. The chances are high on the adverse side if you decide to continue. More specific to the small businesses, the debts can be devastating if you wait for years to grow your business.
Keep The Profits On Priority:
Since the returns are needed quick to reinvest on a venture, it is necessary to think how to get the profits faster. Invest on the resources and the methods which can get you immediate profits. Use these to reinvest, once again with a keen eye on the profit. Soon, your business will be on a comfortable platform on financial scales. This is when you may think of expansion or innovation. With the profits continued, the businesses normally secure a vast expansion over the time. Ideally, it is recommended to invest more than 50% of the total funds on the profit generating resources.
Slow Down To Monitor:
Take some time to monitor if your business is growing on the pace that you wanted it to grow. Relaxing a bit will give you an extra time to recompile your strategies. There may be the changes in the market trends which may require you to revisit your ideas. Or, there may be some excellent opportunities which you could not identify earlier. If nothing, this time will re-energize you to carry out the business demands with an improved vigor.
The top business schools aim on stopping right after achieving the goals. However, setting the goals is an individual decision. Progressing with a very busy schedule and a rapid pace is true for the large businesses where the staff and the resources are abundant. This can be hazardous to the small businesses where each opportunity waiting midway is valuable. It is thus an excellent idea to think of a few milestones, where you can slow down and look back at the performance.
The Capital Division:
The complete business cycle can be divided into three main parts- profitability, resource allocation and scaling. With the profitability as the priority, the major part of the fund is contributed to this head. Once achieved, a part of the funds can be re-invested on the resourcing front. This includes the staffing and the routine procedures related resources. The third part of these funds should be invested in scaling of the business. This includes the expansion and the franchising of the venture. Richard Christensen, an entrepreneur and the author of a popular book ‘Zig Zag Principle’ emphasizes that the perfect division of the capital under the 3 described sections should be 65:25:10 for profitability, resourcing and scaling. This continues for as long as the business continues to grow.
Author Bio
Michael Evans is a passionate blogger and social media analyst. He is associated with groupchesterfield.com that offers offshore bank accounts opening services.