So, you have a small business idea and you’ve finally decided to go ahead with it. Ayos! Business owner ka na!
Cut to six months after opening your business and you suddenly find yourself struggling to cover costs and break even. Maybe you even find it hard to stay driven.
After three more months, you finally decide to throw the towel and close shop.
A lot of small enterprises popped up during the pandemic, and by observation alone, you’ll also notice now that a majority of them are no longer in business.
The question is, what went wrong?
1. Capital and the wrong mindset about loans
Remember, it’s not enough that you have the funds to open the business. Your total capital should also include six months worth of emergency funds in case you experience very slow months (because you will have them).
If you already have enough capital, great. If you don’t, then do what most businesses do: take a loan. We even have tips for faster loan approval.
We consider business loans as “good debts” because it can make you more money in the long run.
As long as you’ve carefully prepared a plan to profit from your small business, you’ve already made debt work for you.
2. Wrong costing on products and services
The rule of thumb is, keep production costs low and profit high. Margins will differ per industry so make sure you do the math. It also helps to look at your competitor’s pricing. If you can compete with a slightly lower price, go for it.
Hindi enough and may tubo lang.Your pricing should cover the cost of keeping things running like utilities, staff salary, etc.
Your priority should always be to increase sales.
3. Lack of marketing strategy
Be clear about who you are and what you’re offering. Keep it simple.
Answer these questions to make it easier for you to sell your product:
- Ano ang unique selling point ko?
- Madali bang mahanap ng customer yung products/services ko?
- Will my message still stand 5 years from now?
You also don’t have to spend so much on marketing.
Make use of free advertising platforms like social media and word-of-mouth. And don’t underestimate the power of sharing positive customer reviews. Always ask for customer reviews that you can share.
According to Forbes, having at least five quality product reviews can increase the likelihood of a sale by 270%. That’s your best (FREE) advertising option.
4. Poor management practices
Hindi lahat pwedeng daanin sa passion when you’re managing a business, especially if you have employees.
Employees will not be as invested as you about your business so make sure that you manage them with the right mindset. Set clear expectations, hire competent staff, and provide them with enough training.
More importantly, you should personally have the know-how about the product or service you’re providing to avoid getting tricked or scammed into doing anything that’s to your detriment.
Small businesses are very hands-on ventures, especially at the beginning. Be hands on to make better decisions as you grow.
If you’re running the business solo, then make sure you give yourself a wage to stay motivated.
Now that you know these factors, revisit your small business plans and make sure you have all the important details covered.