Across the globe, when most entrepreneurs are asked what they need the most, the answer is usually funding. Many entrepreneurs have a great idea and believe the only thing required to bring that idea to life or to take that idea to the next level is funding. Unfortunately, this is rarely the case. Whilst funding is important, it is not the most important. This is why many businesses fail within the first 12 months of starting. Entrepreneurs pour life saving, bank loans, shareholders equity and other resources into the business. They spend money on expensive offices, start-of-the-art machinery and employ top professionals - way before we generate any substantial income. Eventually we run out of cash and the creditors move in.
"It does not matter how many resources you have, if you don't know how to use them, it will never be enough" - Unknown. The key here is knowing how to use the resource you have. This is the most important thing that most entrepreneurs need is actually Education.
- Know your market. Never start a business without knowing who is going to pay for your service/product and why.
- Know your competitors and how you will stand out from them. Never think that your idea is so unique and nobody is offering the same thing. Completely new ideas are rare, so your business has competitors somewhere.
- Know the business environment. The macro environment in which the business operates is important. Knowing how things are likely to change in the future is even more important.
- Know your business. Many times, entrepreneurs get so emotionally attached to their idea, it is impossible for them to acknowledge that they are only a sample of one. Products must be described in the benefits they provide to the end user. If the target end-users "don't get-it", then the entrepreneur must either review the product and/or review how they are presenting it.
- Know your business processes. Understanding the end to end process is key. Which aspects of the business must be automated and which aspects can be manual? This will help identify how the business can optimise its operation and make trade-offs in resources especially in the initial stage.
- Know your costs. It is surprising how many entrepreneurs cannot answer simple questions such as what is the total cost of producing one unit of their product. Costs such as electricity are neglected because they are currently producing from their homes. Unfortunately, when they move to a larger facility, there are suddenly hit with these other costs and find the business is actually not profitable.
- Know how to run a business. Being an employee is very different to being an employer. As the employer, there are many other responsibilities to consider such as recruitment, paying taxes, fund raising etc. which the entrepreneur may not have been exposed to whilst in employment.
Whatever resource are available to a business - finances, people, infrastructure, time, etc, knowledge of all these factors (and more) is key to ensure that those resources are put to effective and efficient use. Where the entrepreneur is not sufficiently experienced in these areas, it is helpful to work with business mentors and/or consultants that can guide accordingly.
For further information on how Xeed Business can support your small business, contact us @ [email protected].
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