Leasing Arrangements
Leasing means that you rent your possessions by allowing others to hire it. Some businesses will lease their property and equipment when not needed. It is important to record these since it will help keep track of rent payments and others. As well as payments, other information such as customer details will need to be kept in case. These should be written regularly, usually on a monthly basis to keep it up to date.
Financial Records
It is important to keep all financial records available so that the business can keep track of their financial stability. Some previously mentioned documents can help you do this, such as profit and loss accounts and balance sheets, since they both show how stable a company is and they can also try to tell you if the company is at a financial risk, although this does not always happen. The company should also make sure to look at these documents regularly so that they can see if any help should be looked for. For example, a new loan may be needed.
New businesses will often fail if they do not carry out appropriate research on the market and when to set up. They always need to analyze their customer’s needs and wants. Companies that do do this will most likely be stable for their starting period because they know what to charge, what to put into their products and where to sell them. This is quite easy to do just as long as you follow The 4 P’s. To avoid problems, a business can make a questionnaire and ask the public to fill it in for first hand information.
If a company does not research its competitors it can also suffer because it may be overwhelmed by them within the starting period. Competitors may steal your customers if they are charging better, or if you have few, you may be overwhelmed with the people that want to buy your product and you cannot cater to them until it is too late. To avoid problems a business can easily go into other shops and see how they are going in the current economy, see their prices and product range.
A business that has a good customer care package and build relations with customers will cause problems for new companies because customers will not want to leave the old company, especially if the new one doesn’t care much about its customers. To combat this, always make sure that your company is prepared to sacrifice some of its profits in the short term in order to keep customers happy. It will probably result in the customers returning if, for example, they have a gift card.
When setting prices you should always consider competitors prices and what customers are willing to pay because if you charge too much, they will not buy any products, but if you charge too little, you may end up with less profits than desired. Use break even charts to find the best way for you to break even, but do not forget to use the questionnaire to make sure your customers are willing to pay these prices.
Companies that make promote their products and services are up to date in the market and are able to adjust their situation, although the advertisement fee may cost them a lot.. This will help new businesses catch up to their competitors since they have lots of attention and in the long run since they can easily use competitors advantages for themselves unless these are protected, (For example, a USP). A company that does not advertise will not have much attention from the public and may be harder to find. A pre-launch advertisement campaign will help them gain some customers from the start.
If a new business has a Unique Selling Point it can gain attention rapidly because it is the only business that can sell it if it is confirmed by law. It may cost a bit of money to buy a patent upfront since it stops other companies from taking the idea as well so it can help you keep the product for your own business. It is a bit of a wait to make a patent since they take a long time to validate but after you have it you are clear to begin.
Selling techniques are a vital way of getting the public to notice your product. There are many legal (And illegal, such as blackmail) ways of selling your products, such as unique sales that many furniture and car dealerships choose to advertise. You should stick to one or two types of selling techniques so the public can get used to your companies image, but in your stores you can put offers on and lay out your products in an appropriate manner in order to attract attention to the correct products.
Taking steps to limit your impact on the environment can give positive publicity, can separate you from your competitors and also sometimes increase profits. For example, many will be impressed if you stop using bad chemicals in your product. On the other hand, if you do not look after the environment well enough, the government can choose to fine you which may result in bad publicity and deter customers.
Small businesses can ask for finance from banks, friends/family, the government, venture capitalists and other places if they need start up capital. Banks are a good choice because if you prove you will profit them then they will give you the money, but it will have a rate of interest on it that you have to pay back. Family and friend may also pay for you, but although they do not have a rate of interest or a time you have to pay them back in, they may ask for some terms. The government may also give you a grant where it is appropriate. Mostly, these do not have to be returned if you benefit the community, so they are a great source of money. Finally, venture capitalists are a good source of start up capital because they offer you an amount of money up front, but they will ask for a percentage of your company in return.
Businesses should always monitor and forecast cash flows so they can see what is and will happen to them in terms of capital. You should always monitor your cash flow to see any past patterns and to check that you currently are not losing money. This can help show you if your strategies are working currently. Also, you should always forecast your cash flow to prepare for the future. Forecasting can help you start building up a margin of safety before an economic recession, for example. This can sometimes mean the difference between keeping and losing your company to bankruptcy.
Businesses should always set clear objectives and financial priorities to make sure that they know what to do in the coming periods. Objectives will help you direct the business and its areas, while financial priorities will also help you invest in what is vital and will benefit your company. You can also invest in certain areas of your business in order to make sure that they are performing to capacity. A key financial priority for a business looking for new products is Research and Development, who will help think of new ideas for future products. If you do not direct your capital or set clear objectives for the future then your company may not keep up with the competitive market since it will not have up to date products, the areas may not be functioning together and you may not be achieving anything since you are not aiming for it.
