17 May 2013, by A. Cedilla
1. Manage your costs.
Financial management skills are necessary to a business’s continued operation and survival. You burn through capital without anything to show for it, you might as well have set your money on fire. A business can’t survive without money — that defeats its purpose.
- First you have to have money to start a business in the first place : a bankroll, start up funds, inventory purchasing, tools and equipment, or web-hosting costs, site design, advertising, etc.
- Then to keep it running (operational, labor and overhead costs) until it starts making money, and until it reaches the point of sustainability
- Then there are things to consider like market research costs like trend analysis and forecasting, and the work needed to gather and act on customer feedback in order to be competitive.
Luxury brands can keep their margins high because their exclusivity and craftsmanship practically guarantee that the people who can afford their products are those in their target market. Other brands make their money through sheer volume (think Forever 21). And that’s just for physical goods. Digital goods are another kettle of fish entirely…with the speed of their transmission, generating buzz, viral marketing, and social media marketing are just the tip of the iceberg. And doing all that takes time and money.
Market savvy in relation to sourcing, costing and pricing (material goods and their production), value and pricing again (e-commerce) is a very real edge in business. You need to find the sweet spot to profit, and to produce the things your market buys from you..
2. Constantly check yourself.
Without intervention and direction people plateau, and so do businesses. Can you imagine peaking in high school? Or hearing that you made it on the list of a “Where Are They Now?” gossip session? Time passes for everything, and in order to be relevant today and tomorrow, you must be able to still connect to the times and with the times.
One way is to watch the market you occupy and adapt before you’re flattened by change. Kodak, once the world leader in photography and film equipment, wasn’t able to adjust to the digital revolution, and is still struggling to get to its feet in the aftermath. For a business to last, it must find ways to stay relevant to the times, and that means numerous adjustments to stay on course.
For instance, who would have thought you could still make a living making seals and signet rings? You’d imagine a tiny, crotchety old guy crafting shiny silver thingies in a small store somewhere, but no, these craftsmen advertise on the internet and are quite active in their respective fields.
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