Entrepreneurship is practically guaranteed to be laden with setbacks. After founding Tayne Law Group, P.C. under the original name The Law Offices of Leslie H. Tayne P.C. in 2001 and recently expanding to a franchise business model, I have of course seen my share of setbacks. Though obstacles in business are common, finding ways to use them to your advantage, so you stay afloat when weathering turbulent times is key. There is no manual for guaranteed success when starting and running a business. Even the world’s most successful business leaders have endured enormous setbacks and business failures. We’ve all experienced challenges in life and business; however, the following questions and tips may help with finding the light at the end of the tunnel for overcoming some setbacks you may be facing and ways for using them to your advantage.
Assess Your Expectations
Part of making a business plan is setting realistic expectations for it – some of these include sales, goals, when you’ll turn a profit, members of your operations team, etc. If you find your business is not reaching its goals or expanding the way you thought it is important to take a step back and re-evaluate the situation. You need to ask yourself some of the following questions: what’s worked and what hasn’t thus far, were my goals realistic and well thought-out, and did I give it my all for reaching the goals I set. Once you have answered these questions, you should have a better perspective for deciding what your next steps should be and whether your setbacks lie in the performance of your business, the goals themselves, or a combination of the two. Addressing the issue head-on is critical. Being able to detect the issue has to come before working on a solution. While it could be tough to admit you have to be honest in evaluating if there’s any weakness in your business that you’re ignoring so you can move forward. Also, don’t overlook researching how other businesses in both inside and outside your industry are handling the problems you may be facing.
Mixing Your Business with Pleasure
A classic mistake that various businesspeople make when starting or running a company is failing to keep business and personal finances separate. If you are just opening your business, I strongly recommend establishing a separate business credit card and bank account to help you stay organized. This will improve your ability to easily track your income and expenses while also making the tax time process smoother for you. Additionally, this helps to protect you if things don’t go as financially well as planned. Often people make the mistake of blurring the lines between business and personal finances or putting all of their personal savings into their business, which can backfire and leave you financially unsecure. It is important to keep your personal and business finances separate to avoid putting yourself at financial risk. Also, ensure you have a robust emergency fund to shield you in case your business becomes unable to afford to pay out the income you had expected.
Have a Backup Plan
Have you established a plan b? Having a backup plan is essential for when things go unexpectedly. Setting limits in terms of time and money along with having a contingency plan and exit strategy built into your business plan can help you avoid entirely damaging your financial wellbeing. When creating a contingency plan, factor in all possible risk and threats your business may face. This should include natural disasters, potential issues with employees, and a weakened economy as well as a loss of data, any of which could prevent you from reaching sales goals or even being operational. You have to be prepared for loss of key employees, loss of big accounts to even the event of computers going down and causing loss of business. Incorporating a backup plan into your business plan will ensure you are ready should the unexpected happen to you, so you know what to do and how to recover should things go south.
Don’t Be Scared to Walk Away
When starting a business, you want to minimize financial risk as much as possible. If your business’ setbacks are becoming too much of a financial drain for you, don’t be afraid to walk away. In many cases, you may be able to ride it out and endure the rough seas as you adjust the sail, but don’t let certain setback end up digging yourself into a deep financial hole that will end up destroying your financial stability.
The ugly truth is when it comes to business it’s a rarity that things will go exactly as planned and the best thing you can do for you and your business is to plan for the unexpected. By being prepared, you will be able to embrace these setbacks and use them to your advantage. While you can’t predict exactly how thing will turn out, in staying one step ahead can reverse disappointment into action and recovery from potential financial setbacks.