There are two kinds of direction of cashflow patterns. To get a business off the ground (at startup or expansion), money must flow in the outward direction to cover startup costs and other expenses. If you can build a successful business, you will always have a lot of money.
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However, no matter the cost of startup, whether hundreds of dollars or tens of thousands of dollars, businesses risk total failure if they cannot get to the break-even point and beyond. Let’s look at 5 reasons.
(1)Your product is probably not satisfying the needs in the society
At break-even point, the amount of revenue realized at that point in time should just be enough to cover the initial startup cost. Sales ultimately equal to income. If you do not build the right thing- the thing customers want and will pay for- as soon as possible- you may likely fail.
Also, the manner, pattern, and structure which your team adopts in carrying out business activities could be directly responsible for a slow rate of sales.
(2)Lack of a creative pattern of sales and marketing
Without a competitive pricing structure to be able to attract both high, middle, and low income earners, your business could be missing out on a large available market share. And not having good-enough, creative, and flexible marketing activities to reach a larger audience could be responsible for your low sales volume. Marketing is what draws a customer to your business.
(3)Are you a true Entrepreneur?
An Entrepreneur sees an opportunity, puts together a team, and builds a business that profits from the opportunity. The hardest part about moving forward is making sure you don’t ever look back. To remain focused means to stick with your priorities and goals; focusing on the message, and not on the background noise; and executing the desired course of action.
As a leader, if you are flat and have no energy, it flows to your staff, to your customers, and eventually to your profit.
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(4)Low Business Efficiency
The efficiency of a business system can be determined by being able to correctly measure the following:
- Total cash flowing in
- Total cash flowing out
- Number of man power
- Actual number of customers
A mathematical computation of these parameters and comparison can be used to arrive at the efficiency of the business. A low efficiency is a clear indication that your business is far from reaching the break-even point.
(5)Lack of working capital
Lack of enough working capital, to be able to carry on with the business day-to-day operations, can hinder the overall anticipated progress. At each level of growth, the CEO must start planning the systems needed to support the next level of growth.
It is the intention of every business owner to get to the break-even point, and of course beyond. Although, statistics have it that 95% of new businesses in America fail after the first 5 years, if you learn to build a successful business, you will have developed a profession that few people ever achieve.
