BUSINESS TIPS

3 Mistakes That Can Cost You Your Business

Ignoring the Importance of Cash Flow Management

Two woodworkers had a thriving business building interiors for retail stores. They did beautiful work and their customers were pleased, but it often took them 60 or even 90 days to pay the bill. Until the money rolled in, the partners couldn’t start on the next job because they couldn’t buy materials. They lost jobs because customers were in a hurry. You can be making plenty of money, but if cash isn’t arriving in time to meet payroll and buy inventory when it’s needed, you can be quickly out of business.

Getting sloppy with recordkeeping

The owner of a lawn service was haphazard about recordkeeping. If he had kept better track of lawns mowed, he would have known that his oldest mowers had so many miles on them; they were unlikely to last the season without an overhaul. Instead, it came as a very unpleasant surprise when three of them burned up in one week. Good records are a key decision-making tool. If you’re not keeping good track of your business, you are denying yourself the tools to make good business decisions.

Ignoring inventory

The owner of a business-supply store bought a flat of construction paper just before school started. Three years later, employees were still stepping around the boxes to get into the storage room. If you end up with stale inventory, discount it and get it out of there. Otherwise, you’re just tying up money and taking up storage space.

Copyright 2003 RAN ONE Inc.