Ask any entrepreneur and they will tell you that one of their ultimate goals in business is loss prevention. In fact, many of them spend as much time preventing losses as they do making profits. Such is the extent to which business owners try to combat losses.
But in spite of these claims, it is not uncommon to see many brick and store shop owners, small and medium scale business owners, and even the greatest of entrepreneurs, running their businesses at a loss rate. Why is that so? Some may quip.
Well, there is no putting a singular marker on the causes of losses in business because there are countless factors that could be responsible. In fact, if there is anything we’ve learned from history, it is that the successes or failures of a business lie solely on the business owner.
This is why I often say to business minds that the onus is on you to ensure that you and your employees are maximizing their daily work output while making certain that even the most unexpected problem does not become an issue that culminates in business failure. I say that because, it is quite common in the business world to find entrepreneurs cutting down on set standards in an attempt to reduce expenditures, efforts, or time. But what many of them fail to understand is that business failures and losses are always a result of some certain compromises in standards.
Maybe you’re supposed to spend a certain amount of time producing your goods or use a high-end storage medium like the base drum heater to store your products, but due to the fact that you want your goods to hit the market on time, without necessarily incurring many expenses, you go for a production shortcut or use a substandard storage option. And eventually, risk running your business into a loss.
We can continue to give illustrations of instances where businesses run the risk of running at a loss due to their lackadaisical approaches if we want to, but that wouldn’t really help you prevent your own business from experiencing the same. Here are a few tips.
Build on your business plan
More often than not, businesses experience failures and losses, not because they are so bad at what they do, but instead, because of their deviation from the set plan. Safe to say that it is expected of any business, irrespective of how large or small, to have its own planning, called the business plan. And this plan is the framework upon which the company’s financial decisions, adjustments, and corrections are to be made. Any deviation from this set plan can only mean one thing – more losses, fewer gains. To prevent such an unfortunate scenario, business owners are advised to build on their existing business plans and not deviate from them. When you don’t build on what you’ve planned already, you risk making random decisions, taking unnecessary steps, and at the very worst, delving into decisions that carry more risks than what your business could handle.
With each passing day, the modern world keeps evolving and advancing in such dramatic fashion, and it would totally be unheard of if you, as a business owner, fail to take advantage of this drastic advancements. And the biggest of these modern growths is none other than the evolution of technology. In this day and age, businesses can literally automate everything and anything concerning their business processes. And this can only imply one thing – fewer mistakes and minimal losses. From finance to production, logistics to staffing, assessments to appraisals, expansion to growth, there is simply no limit to how much you can do with the help of modern technology. If you’re looking to cut your business from the league of those loss-incurring companies, then, you have no choice but to embrace the use of technology in various aspects of your business.
Sometimes, business losses are often a result of too many expenditures. And when you begin to spend much more than you earn, it’s only a matter of time before you start running at a loss. To prevent this from happening, you can choose to go green today. Going green doesn’t mean repainting your brick and mortar store or company building green, rather; it simply means opting for those energy-saving, cost-saving options. In case you still don’t grasp what going green is all about, it simply means cutting down on the use of that expensive paperwork and documents by going email, digital, or online; installing low-energy light bulbs or transforming your office into a completely green environment by regularly opting for green options.
Health and Safety
Like we mentioned earlier, losses can come in different forms. And the best way to prevent them is by understanding the harbingers. One of the most common forms of business losses often presents itself in the form of accidents and injuries. Even with the best insurance policies around, it has been established that businesses still struggle to cope with the consequences of accidents and injuries. Accidents, whether on-site or off it, is in no way favorable to a business, and in most cases, it even leads to the greatest of losses – loss of staff, man-power, and bright minds. To prevent this, business owners should strive to invest richly in health and safety sensitization. Furthermore, businesses also need to invest well in health and safety measures, for the protection of lives and properties. But besides investing in safety measures and strategies, businesses need to constantly sensitize every member of their staff, so as to avoid accidents, unforeseen incidents, and losses.
Obviously, everyone wants the best staff, but all too often we become very set in our ways in terms of deciding who can bring the best skills to work. Looking at job advertisements, it is no longer rare to see unreasonable demands for experience and core skills. Too few companies are looking for new angles to take, and as a result, they end up employing an experienced staff who are unfortunately set in their ways. An alternative option is to reduce your wage bill is by hiring interns, who are very often students and therefore are up to date on modern trends and technologies that your older staff may not be.
Uday Tank is a serial entrepreneur and content marketing leader who serves the international community at Rankwisely. He enjoys writing, including marketing, productivity, business, health, diversity, and management.