That’s The Good News, Now Do You Want To Hear The Bad News?

If you do a quick search on the internet, you will uncover hundreds of experts, coaches, accountants, journalists and government organizations that quote the statistic “8 out of 10 business fail in the first year”. However, the fact that the statistic is widely touted doesn’t necessarily mean that it’s true or backed up by empirical evidence.

So what is the truth? I searched the internet and couldn’t find confirmation of any study that was done to back-up this statistic (that 8 out of 10 businesses fail) by a reputable or well-known bureau. What I did in fact find was some evidence to the contrary. According to credit reference checking agency Veda Advantage, only a small percentage of new businesses close in their first 12-months of business.

What is the exact amount, you ask? Would you believe, less than two percent?

However, they assert another 32 percent close their doors between their second and fifth year of operations, while 21 percent wind up between the sixth and ninth.

So, that is the good news. However, as you can probably guess, it’s not ALL good news.
Just because a start-up doesn’t go under in the first 12 months, doesn’t mean that the owner is running a successful enterprise. I wonder if anyone has bothered to measure how many of the businesses who survived:

• Paid the owner a wage that was at least equivalent to what he/she could have earned elsewhere as an employee?
• Generated a profit and positive cash flow? and
• Had enough working capital to service their debt, pay taxes and suppliers etc. as they came due?

The first few years of business are incredibly risky. In working with hundreds of business owners, we have found that the large majority opt to forgo their salary or inject more equity to prevent them from going under prematurely. What this means is that, while they may not have “technically” gone under, these fledgling enterprises are far from commercially viable and successful.

Statistics can be both helpful and misleading at the same time. It is easy to assert figures but more difficult to substantiate their veracity or explain the implications thereof.

The author of an article or press release will often use statistics to capture your attention and motivate action. That’s why people use statistics – numbers are persuasive and have an aura of authority.  A statistic like – 8 out of 10 businesses fail – gets attention, doesn’t it?  Whether this data is accurate or not, is only half the story. As a business owner or manager, we must look deeper to find the insights that we can take away and use to improve our results.

Personally, I don’t care what percentage goes under. No matter how long you’ve been operating, if you’re not getting paid a salary, producing profit and generating positive cash flow, you’re not running a successful company. Closing your doors is only half the story. The doors may very well be wide open, but technically, no one is there.

Rhondalynn Korolak

Did you know that inventory is one of the great hidden costs of business?

Business owners should understand its importance of keeping it under control.  Visit http://www.financialforeplaybook.com  for more on this story…

Is Inventory Killing Your Business?

Did you know that inventory is one of the great hidden costs of business?Very few business owners understand its importance and the significance of keeping it under control. Inventory ties up your cash while providing little benefit to revenue – until the items are sold.  Excessive inventory can weigh a business down and ultimately lead to revenue losses.

Excess inventory is so often the primary cause of cash flow problems that it is worth your time and effort to consider how your current stock holdings are affecting the health of your business. And it’s why you should have a clear understanding of how much inventory you have, how much you should realistically have, what it’s worth today, and how old it is. 

Every time you buy stock for your business, you should see the purchase as an investment. Like any other investment, you should expect it to provide you with a financial return in a short period of time.  If there is a significant gap between when you buy the goods and when you turn them into cash by selling them and collecting the money, you need to re-assess the value of your investment. 

When you spend before you earn you are effectively taking out a loan for the intervening period. Very often this will require a ‘real’ loan from some sort of finance company, a delay in paying suppliers or a delay in paying yourself.  If you want to improve the cash flow and health of your business quickly and without spending a dime on advertising, take some time out today to review your stock levels and get rid of excess inventory. 

Rhondalynn Korolak, Author of Financial Foreplay® and On The Shoulders of Giants

If you are like most business owners, you went into business because you are passionate about AND good at WHAT you do… and you wanted the autonomy and financial freedom of owning your own business. You were probably thinking, “as long as I am good at what I do, how hard can it be to make a decent living and support my family?” And you have probably discovered that it is actually harder than you thought.

Here’s the problem…

You may be one of the 97% of small business owners who discover that although you work incredibly hard and your sales seem to be increasing each month, you have little to show for it financially.  Perhaps you are already doing well but you are unsure how to accelerate your results or expand your business? Or you may simply be wondering why you are struggling to pay the bills lately even though your accountant says that you are making a good “profit”.

One of the biggest problems is that business owners often convince themselves that being busy is what business is all about. And you tell yourself “as long as I work hard and do my best, there is not much else that I can do”.  Everyone knows that we’re supposed to work smarter, not harder, but the challenge lies in knowing HOW to do that. And in the meantime, you may have found it just seems easier to do everything…just in case it’s important, or makes a difference.

So, if you’re supposed to do less, HOW do you figure out what is critical or what will have the biggest impact?

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Rhondalynn Korolak, Author ofFinancial Foreplay® and On The Shoulders of Giants

We live in a world with a million possible distractions, pressures, emergencies and interruptions, how can we stay possibly stay focused (on our goals) and sane?

There are always going to be several things constantly competing for my your time – marketing campaigns to design, team members to manage, customers to respond to, business opportunities to explore, issues to follow up, personal commitments etc.  However, whenever you try to work on too many things at the same time, inevitably none of them ever gets done.

To assist my clients in staying on track and keeping things simple, I developed the following list of 5 simple techniques/questions to put things into perspective. When in doubt – check the list for guidance.

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Rhondalynn Korolak, Author of "Financial Foreplay®" and "On The Shoulders of Giants

It has been over 50,000 since human beings lived in caves.  All those years ago, life was pretty much about survival – each morning our ancestors would emerge from their caves and scan the horizon for imminent danger.   Although things have changed a lot in our external environment in the last few thousand years, in many ways, the wiring in our brains has not.  In fact, 90% of what you and I do on a day to day basis is still based on that ancient wiring and survival mentality and it is precisely this legacy that needs to be re-directed to prevent self sabotage from holding you back, personally and professionally.

You see our brains are wired to spot and avoid danger.

Even though the danger may not be “life or death”, we see this dynamic play out in our work environments almost every day.  For every daring and outlandish new idea that is proposed by one hopeful soul, there will be a long list of sceptical colleagues who are willing to offer 20 reasons why the idea might fail or cause harm.

So, how does this play out exactly?

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