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How to Avoid Closure before You Open for Business

Nov 24, 2007
According to Barclays, new business ventures in the UK rose by 25% in 2006. Unfortunately, business closures also rose 50%, compared to the previous year. While the statistics are not very promising, you can make a few choices giving your business a better chance at success. Although the concept seems impossible, you can run a debt free business by not risking more than you can afford to lose, budgeting for mistakes, and keeping your profits.

Starting any new business means putting finances at risk. Basically, you are betting on your business ideas, getting enough customers to show a significant profit, and not having to suffer many setbacks. Unfortunately, every new enterprise takes time to establish and has setbacks, so you need to practice a little damage control before anything negative actually occurs.

For example, you decide to invest in an advertising campaign. For whatever reason, putting your money down a black whole would have resulted in as many new contacts and customers. But, you have prepared for such a contingency. You did not spend more than you could afford to lose. It is much easier to recover from a reasonable expenditure than shooting your entire wad of cash on the assumption the advertising would result in substantial profits within the next month.

If you are wise enough not to risk more than you can afford to lose, you should also have an adequate expense account, to cover natural expenses and the cost of unexpected (expected) mistakes. Say what!? Yes, you need to expect mistakes. Although you do not plan for them to occur, problems will crop up when you least anticipate their appearance. So, expect the unexpected. Keep enough money in your coffers, so you can recover without having to refinance your home or sell your firstborn child.

Finally, if you run a debt free business, you can keep the profits. Although the concept sounds simple, the practice can be challenging. For many new business owners, enjoying the rewards of labor is impossible. The bank has a lien on the house, and the accounts for supplies and outsourcing need to be paid. Unfortunately, after the bills are paid, some entrepreneurs have to dip into the family account to keep going. Then, the next month needs paid for, and the downhill spiral begins, with a crash in the near future.

So, if you want to keep your doors open, plan for a debt free business to avoid closure before the doors even open. DO NOT put yourself in the position to lose your home and the security of your family, if your business venture struggles. To avoid a series of credit accounts, plan you expense budget accordingly-including the inevitable mistakes; and, do not invest more than you can afford to lose. Then, you can keep your profits and live to open your doors for another day.
About the Author
Paul Sutherland is an Accelerated Business Growth Coach. His company - Daniel Thomas International - www.dti.eu.com helps SMEs to grow their businesses with tried tested and proven techniques and strategies, increasing their bottom line profits in 90 days or less?
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