We’ve always heard about how common it is for businesses to fail within a year of starting. This doesn’t come as a surprise to many because sustaining your business over time takes real effort and you need to make a decent amount of profit to ensure you won’t face serious financial problems.
However, what’s more surprising to hear is that it’s almost impossible for businesses to reach 6 figures, including those you think are incredibly successful. We’ve compiled a list of reasons why entrepreneurs fail to reach 6 figures in their businesses so you can also avoid these common mistakes.
Relying too much on loans for financing
Numerous entrepreneurs rely on loans to kick start their business. This is partially the reason why most fail because they struggle to keep up with the payments. However, even those who can afford to pay on time still struggle, because their money is constantly used to repay the cash they borrowed in the beginning.
Ideally, a wise choice would be to start your business when you have enough money. This also allows you to finance your costs and expenses until they are able to self-sustain through your profit.
Excessive focus on valuation and not profit
A lot of entrepreneurs tend to solely focus on a high valuation and less on actually making a profit. This results in them having a business that is highly valued, but one that doesn’t necessarily bring in money. Think about building a lucrative model and exploring new sources of generating revenue so you can gradually build your sales and profit margins. For instance, something as simple as offering a discount code for a customer referral can help you attract new customers and increase your brand exposure.
Spending too much on accounting departments
Hiring a team is necessary for your business growth, but you should evaluate on cutting down on expenses where you save instead. Accounting is crucial in any business, but you don’t necessarily have to hire and incur the overheads when you can outsource instead. It will be more beneficial for you to seek help from experienced accountants, who have the right skills and knowledge to meet the accounting needs of your business at a fraction of the cost of hiring them individually.
At Ackenting Group, our audit firm will help your business with everything related to financials. Our corporate accounting services ensure your business will stay up to date with the necessary financial records so that you are always on top of your finances. Work closely with our experienced accountants so you can make the best financial decision for your business to remain financially viable.
Lack of innovation
Businesses need constant improvements and tweaks to succeed. Be adaptable to current trends by frequently monitoring the market and altering different strategies to make the most profit. On top of that, this will also allow you to keep up with current trends so that your business stays ahead of the curve.
Expanding too quickly
After months or years of hard work, the idea to grow your business and to do it quickly is exciting. But outpacing your business capacity to keep up with growth can be disastrous. You may have good command of your numbers when your business is smaller. Rapid growth without keeping track of your financials can lead to tight cash flow. Ensure you build your business to scale so customer services, human resources and business operations can grow at the same pace to meet the growing demands of your business.
By engaging our accounting and bookkeeping services, you will gain a better insight on your numbers. With a solid financial evaluation and realistic growth projections, you can make better financial decisions and know the right time for your business to expand. With years of experience, our dedicated accountants at Acketing Group will be nothing but of great value to your business.
If you require any assistance on accounting services, feel free to drop us an email at firstname.lastname@example.org or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.