Running a successful business is not child’s play. One has to encounter several problems to run the business well. With inconsistent economic policies, changing governments, inflation, cash flow problems, fluctuations in the cost of labor and raw materials, it’s really hard to run a business. In order to run the show successfully, one must be very careful and keep in mind some common problems that people face in order to overcome them when the time comes. Some of the common problems that are usually faced when running a business are:
Lack of cash flow: Cash is the lifeline of any business. Having adequate cash is necessary to run a business successfully. Lack of cash flow can lead to insolvency in the long run. This problem arises when you give long periods of credit. It is always better to give a 1% or 2% cash discount to encourage people to release payments on time.
Change of government or economic policies: With each change of government or economic policy, business policies and strategies suffer greatly. Each increase or decrease in the price of products or tax rates the company suffers either positively or negatively. For example, the change in export or import policies affects the commercial house that depends on any of them. Every cent of increase in the price of fuel can also lead to significant changes in the business.
Variable cost of labor and raw material: In the current scenario there is a shortage of labor and raw material, due to the economic recession. It has become really difficult to get labor and raw materials at cheap prices. Lack of records: it is very important to keep updated records of inventories, sales and purchases. This will help you keep track of all the money and you will be able to see where to cut costs for maximum profit.
Hard Competitors: It is almost impossible these days to have a monopoly on any product or service. One has to face great competitions in all spheres of business. From the acquisition of space, acquisition of labor, raw material and necessary services, one has to compete with several others who are looking for the same services. Keep buyers and suppliers intact: It is very important to keep your list of buyers and suppliers. Try to keep them happy and satisfied for as long as possible. Offer them cash discounts and, if possible, offer longer credit periods. Entertain them timely and listen to their complaints patiently and respond politely. This will help you strengthen your relationships in the long run.
Accounting and taxes: It is the most problematic area of running a business. Keeping the ledgers up to date is quite troublesome at times. It is better to help professionals to keep accounting and tax related documents ready. The accounts help you to know the real position of the business, what is the state of it, where it is really going. Is it cost effective or do you need certain modifications in the procedure to manage things.
Natural disaster: natural disaster is the most unforeseen danger. It is almost impossible to prepare against unforeseen calamity.
