Help for entrepreneurs. How does the de minimis guarantee work?

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Description Entrepreneurs are people who are able to see business potential where others do not. These are people who can create a vision of the entire project, plan it, and then move on to the implementation stage. Does this mean that people with an element of entrepreneurship do not fail? Of course not. If that were the case, there would be no question that is the subject of this post. Why do companies fail? There can be many factors for this, which we will analyze together below. Inadequate preparation A business plan is a kind of map that guides us through the next stages of the company's development. Writing down the key assumptions of the business that we plan to conduct allows you to focus on the next goals that our company should achieve within a specific time frame. Moreover, when writing a business plan, whether we like it or not, we conduct a market analysis, we observe our competition, develop a pricing strategy, etc. If we approach this task in an incompetent way or fail to do it properly, we are almost guaranteed to fail. Budget too low The first step in assessing the profitability of a business idea is to write a business plan. It is a good practice to calculate the initial costs of the business while maintaining a sufficiently large margin of safety. Unfortunately, it is not uncommon for even experienced businessmen to assess the size of the investment too optimistically, putting their hopes on quick income generation. Sometimes it works, other times it doesn't. The waiting for the first tangible profits is prolonged, the company begins to get into financial trouble and the only solution is to close it. Why businesses fail 3 Focusing not on what needs to be done is one of the answers to the question of Why businesses fail. The first and most important value in your company are customers. You cannot forget it. No or too little experience in the industry If we plan to enter the market with a business whose specifics are completely unknown to us, it cannot bode well. It is known that everything can be learned. But as Benjamin Franklin once said: Time is money. At the moment when your start-up company needs funds to survive and grow, there won't be much time to learn the basics. Therefore, before you invest even a zloty, get acquainted with the needs and requirements of the target market on which you plan to operate. Find out who your potential customers are, find a way to convince them to use your services, refine your product down to the smallest detail. Only later, go to the market. Never the other way around. Start in style A new company means the need to invest in machinery, equipment, sometimes furniture and equipment. It is known - everyone wants to work on the highest quality equipment. And for this, unfortunately, you have to pay. Where necessary, don't spare a penny. But if you can save a few zlotys somewhere, don't hesitate. You will ask: What will the CEO look like sitting on a stool, driving up to the company in a worn-out car and using a prehistoric laptop and telephone? The answer is normal. He will look like a person who is well aware of the priorities. Like someone who understands that if the business works, it will be time for a comfortable chairman's chair, a better car and more modern electronic equipment. For this to happen, the money invested must start to pay off. And you will achieve it not through a brand shirt, but through good quality materials (if you manufacture something), failure-free machines, qualified personnel, etc. Why businesses fail 1 Why do companies fail? One of the reasons may be insufficient preparation. Writing a business plan is essential to assess the profitability of a business concept. Too much thinking Of course, strategy is necessary, as are deliberate moves. However, you cannot concentrate solely on this. You've started a business, so the plan is that you'll start earning money. For this to happen, you must start selling. Rather than endlessly tweaking the details, it's much better to start with what you already have and make the necessary adjustments if necessary. Plans are there to be modified. Remember that you will never be able to create the perfect strategy. One that cannot be improved in any way. Therefore, act, monitor and correct. Otherwise, rival companies will do it for you. And you will pack your belongings and return to the starting point. Record pace of growth Can the rapid growth of the company be harmful? Unfortunately yes. Yes, every entrepreneur plans to develop his business so that it can bring more and more profits. But there may be a situation where something that was supposed to make us eat with golden cutlery contributes to a spectacular failure. How it's possible? The development of the enterprise should be carried out in accordance with the developed strategywhich is a viable plan for steady and lasting growth. Each subsequent project will involve additional costs. If you do not evaluate everything properly, you may stumble over your own success. The fall will be very painful in this case. Enterprise development The development of the enterprise should be carried out in accordance with the developed strategy, which is a realistic plan of constant and sustainable growth. Underestimating the importance of advertising and marketing For every company, regardless of its size, promotion is of enormous importance. If you are of the opinion that customers will find you, then you can miscalculate. As with most of your activities as an entrepreneur, advertising and marketing should result from a deliberate strategy. Even if when you start your business you don't have any funds for advertising, you can use free forms of online promotion. In order for you to inform your customers about your business, you will need a marketing strategy. It is essential for your business to exist and stay on the market. Inadequate selection of employees You are the boss of the company. This does not mean that you need to know everything. It also doesn't say that you can't hire people who are more qualified than you. Let me put it differently - it is highly recommended that your team consists of talented and experienced people. Only in this way will you be able to make your small company survive the first years of its operation, take root on the market and bring the expected profits. There may be times when you feel "like a minor link," but believe me, this ship won't go far without a captain. So, hold the helm and manage your crew so that you can safely reach your destination together. Why businesses fail 5 Why do companies fail? Often the reason could be "starting in style". Where necessary, don't spare a penny. But if you can save a few zlotys somewhere, don't hesitate. Concentrating on the wrong things The first and most important value in your company are customers. Not you or your dream of running a business. Not money. Customers. It is thanks to them that you are able to operate on the market, constantly increase the range of services provided, pay your employees, and live comfortably. Therefore, focus on listening to what your audience is saying to you. Get to know their needs and find a way to meet them. Have you received an unflattering opinion? Instead of "swearing what the world stands on," consider why the customer was dissatisfied? Could you have done something different? There is a way to improve your product? Were other people who may not have expressed their opinion on this subject also faced with a similar problem? Ask, investigate, draw conclusions, optimize. Concentrate on what's really important. No commitment It happens when the entrepreneur, choked with his own success, suddenly gives up. He is confirmed in the erroneous belief that since the cogs have been set in motion, now his presence and sacrifice are no longer needed. You have to remember that the company is not a perpetual motion machine. It's no secret that running a business is often associated with arduous work for many hours a day, with a lot of sacrifices, the need to reorganize your own life. Being an entrepreneur is not easy. And it can tire. If you don't feel up to the challenge, better not even start. Lack of commitment on your part will most likely lead to the necessity to come to terms with the failure of your company. marketing and advertising in the company In order for you to inform your customers of your business, you will need a marketing strategy. It is essential for your business to exist and stay on the market. Why companies fail - summary Many times there is a situation where a new company, despite a great idea, a creative founder and a lot of work put in, fails. It is not uncommon for a business to close before the end of the first year from the date of its establishment. We know from statistics that it reaches 1/3 of enterprises. Only a few may celebrate the fifth anniversary of operating on the market. By knowing what you should pay attention to, you will most likely be able to protect yourself from mistakes that could lead you to bankruptcy early.
Created 5 Jul 2021
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