HOW TO START AND RUN A SUCCESSFUL BUSINESS

HOW TO START AND RUN A SUCCESSFUL BUSINESS

(By Iftikhar Anjum)

Personal business is the guarantee for financial independence. Later or sooner we have to start our own business. A survey has been made that almost 80 to 90 percent of the people want to start their own business in life but they can’t start it in their lives. The reason is that they are not sure whether they will be successful or not. They do not trust in their abilities, in their skills. As a matter of fact the success of your business depends upon you. You will be responsible for the failure or success of your business. If you trust yourself and work hard you can create a success story.

It has been observed that 80 percent of the businesses fail in their first year of operation and 90 percent are failed in three to five years. Even people who have prepared an excellent business plan fail; even the people with a lot of money waste their fortune because of some mistakes in the business.

Today I want to share some basic requirements for running a small business successfully. Before going in details I would like to share a story of a young boy has passion for starting a liv stack forming business. He went to countryside and decided to buy a cow; he went to a farmer and asked him to buy a cow. The farmer told him that the average price of the cow is between  $2000 to $3000.

The boy told that he has only $100 at present. The farm owner laughed at his reply. After some bargaining, the farm owner said that he has one cow that he can give for $100 and he is not sure whether you are interested in buying that cow or not because that cow is so old and not very healthy.

The young boy agree to buy that cow for the sake of experience, he paid the money and asked the owner the owner to deliver the cow after a week at his place so he may make some necessary arrangements for that. After a week the farmer came with the cow. He told the guy that he brought the cow but the cow could not survive on the way, as she was very old and sick. When the guy asked for the refund, the farmer replied that the deal had been finalized last week. The cow was yours. I kept that cow with me with demanding any extra money from you and even I drove to drop that cow here but unfortunately the cow died on the way so the refund of money is out of question.

He could give only one favor that he can take the dead cow back to avoid your inconvenience. The young guy thought for a while and asked the farmer to leave the dead cow with him. After few weeks the guy went to the farmhouse and asked he farmer, that he is ready to buy the cow costing for $2000 – 3000.The owner was astonished that a month ago you were not having more than $ 100 and what a big deal is that, in a month you got the huge sum of money. Did you get a good job or a won a lottery?

The boy replied that I sold that cow. The farmer said,” How can you sell a dead cow?” The boy replied that he raffled the cow and put an ad in he local paper that he wanted to sell a cow for only $ 10 through raffle. And the ticket amount is non refundable. The guy told that he collected $5000 through raffle entry. And I refunded the money to the winner and explained him that the cow could not survive as it was very old and sick.

I personally don’t suggest you to start your business like this and sell a dead cow to people but at the same time I suggest you that you have to think out of the box like this young guy to start your business.

Now lets talk about the three basic things starting and running a successful business I will discuss what it takes to start a small business and convert it into a business enterprise. For the success of business an entrepreneur should keep the following things in mind.

Firstly, you have to choose a suitable structure for your business.  The structure of the business plays a vital role in its success. The entrepreneur who chooses the inappropriate business structure his business is deemed to be failed later or sooner. 

People invest a lot of money for establishing a business setup and they put them in work for about 16 to 80 hours daily, they sacrifice their family time, their facility, their children and the other pleasures of life just to make that venture successful but after few years they don’t have any other option but to shut down the business because they have chosen the wrong structure for their business. And sometime, even it becomes very difficult to close the business because of the liabilities of the business become too high to be paid and you wished if you had not   started your business. It has been investigated that, these people work very hard, they put all the energies with honesty and dedication but in spite of all they could not survive and opted to shut down the business to avoid further loses.

One of my friends started a business, he spent almost 10.0 M in his business but although the business seemed to going well but he was bearing continuous loss. After two years he sold the 50 percent shares of his business just to safeguard the business but it could not survive for more than a year. And finally when both of the partners decided to shut down the business, there was a liability of about 4.0 m on the business. There was only one reason of the lass and that was the selection of the wrong structure of the business. The suitable structure of your business ensures the success .it is the important than everything in business.

Secondly, your business should be self-sufficient as soon as possible. Your business must bear not only its own expenses but also should pay you as well. It is wrongly believe that you must invest in your business for at least three years. The experience business gurus say that every business bears loss in its first year. And will come on break even in the second year and the owner will be able to draw some amount in the third year only. Most of these businesses do not survive for three years so generally the people lose their saved money and go back to home not only empty handed but sometime having a lot of liabilities which they have to pay for the rest of their lives. Ideally a business must self sufficient in first thirty days of the commencement.

If you are working for long hours in business, and putting your savings and even investing borrowed money but not thinking about the structure of your business, you will never be able to draw any money for your business. The owner of the business should be paid off. And it is only possible if the business is self-sufficient.

Thirdly, there should be scalability in your business. Means if you want to expand your business you should not bring more external investment in the business. It should be according to the capacity of the business. Means your business should be saleable in its structure. It should have the capacity to be increased or decreased according to your desire.

Sometime people run a business successfully. The earn good profit from the business and for the sake of expansion they open an other branch for the business. The expenses will be double but the income will not increased at the same rate.

Now what happens, they take money out from the parent branch to feed the new branch and there will be huge cash flow from the main branch.

It shows the misjudgment of the business owner. The business was self-sufficient but it was not in a position to bear the expenses of a new branch. This may create crises in the business.

To come out of these crises the owner has to sacrifice his drawing or has to invest his savings. The expansion is good for business but it should be planned according to the self-sufficiency of the structure of the business. If the business is generating good profit and can easily afford the expenses of a new branch then its is a good practice and if the structure is not self sufficient then the expansion will be harmful for the business.

If you want to start you business, you must plan the structure of your business smartly, which is guarantee to success in business.

The objective of starting your business is to have financial independence, have more time for family, to have more money, to have more freedom. If your business does not provide you these things then there is a problem with the structure of your business. You need to think about the structural reengineering of your business. Here is an example of the ideal structure of a small business, which grew to a big business.

A woman wanted to start a business of desktop publishing. She didn’t have enough money to start that business. She went to traditional business consultant for feasibility of that business. As per feasibility report she needed minimum $2000-3000 $ to start her business. She did not have the required amount to start that business.

She contacted to the business structure consultant for the solution of the problem.

She told the consultant that she has excellent sales skills and she can sell well but she does not have the required amount. The consultant suggested her a business structure according to her financial position. She was advised sign an agreement with the publishers who are already working in the market.

She signed agreement with the four desktop publishers for the sales. she got brochures printed for her business and including all other expenses she managed to start this business from her home with a little amount of $75 only. She worked very hard and she made good sales and in the first month she made a net profit of $2000. And it becomes double in the next month.

With this amount she got an office and hired some sales girls to increase her sales and later on she hired a manager as well. In a short span of a year she was well settled. She signed contact with many more companies on the same terms and conditions. Now she had more money, more time and more freedom. Now she only spent only few hours with her sales team and the manager and she has much time for her family and for herself.

Furthermore, there are two myths about starting a business which cause the failure of business

Myth 1: the better most traps                  

The entrepreneur thinks that he should come with an innovative idea. He should do something, which has not been done already in the market. Innovation is good but it is not for beginner.To introduce a new idea or concept you have to educate the public, and if you already have scarcity of fund how can you manage that.

So the best practice is to take a success example and start your business on the same pattern, you will hopefully get success.

Myth 2: A lot of money to start a business

 The second myth which stops most of the people from staring a business is that you must have a lot of money to stat a business. And his is what conventional business consultants, bankers, government officials and experience businessmen tell.

You need a lot of money to rent premises, buy furniture, telephone line and other basic things. And he second things is that you have to work for your business for 2 to 3 years without any salary as your business will not be in a position to draw out money for you. Even you have to contribute to bear the monthly expenses of the business.

Just think if you have to lend $2000 to$ 3000 to your business each month. This thing will not work long way. Most of the people who start their business in such a conventional way, they invest their savings in business, even they borrow money from some bank, they sacrifice the comfort of their lives, their family, and their children. They can’t work for a long time like this and the business get fail.

The statistics of most of the businesses, which grew to big enterprise, started with the amount of Rs 10,000 to 500,000. Any kind of business can be started with this initial amount.So as an entrepreneur you must know the reality of these two basic myths, which keeps you from starting business. You have to take advantage of others experience for your business.  Start your business according to your passion and interest. No need to be so innovative and perfectionist.

 Conclusion

Business is the source of freedom, financial independence, and stability. A person who is doing a job remains in the rat race and always worried about his expenses. They work for money for their whole life and if you want money should work for you, you have to start your business. Any kind of business that you like and passionate about. It is not very difficult a start a business. The money and experience are not the hindrances for business. Neither you need a lot of money not a lot of experience to start a business. You have to choose a suitable structure for your business, which will make your business self-sufficient and scalable. The myths about business are not true. If you are passionate about anything, nothing can keep you from doing and being successful

Bibliography:

1.     The rich dad, poor dad

2.     How to run a small business by Justis

3.     enterprenuership