Make Your Business A Success!
May 24, 2013
Data from the SBA shows that most small businesses fail within the first two years of existence. Why? Although there’re many reasons, it’s most often because business owners don’t understand or ignore important business fundamentals. Another important reason why businesses are failing at a high rate is because business owners neglect to maintain and act on accurate and meaningful information.
So what do business owners need to know?
There are four basic business functions that support the foundation of a business. To be successful, it’s important that all four of these business functions are present.
- Human Resources
- Marketing and Sales
- Operations and Productions
- Finance, Accounting and Administration
Think of these functions of your business like a four-legged stool. Remove one of the legs and the whole stool will fall. What I find is that when a business first begins operations, the owner may have some of the above functions in place, but not all of them. Therefore, the business doesn’t have all of the essential “legs” to operate, and it fails at some point.
Business success also depends on proper management of its operations. You need to:
- Understand how your business works.
- Know what the financial numbers mean.
- Know how your business is performing and why.
- Follow steps to control your business operations.
- Protect your company’s assets.
It’s important that business owners make good decisions. Many times small business owners don’t make good decisions because they don’t have good information. They therefore, operate somewhat blindly and they lack understanding of key aspects of their business. To improve the understanding of their business, owners need to have a reliable management information system and accurate financial statements. They also need to understand what the numbers mean that are in the statements. Basic financial statements include the Balance Sheet, Income Statement, and Cash Flow Statement.
– John Parms, CPA