Tips to Prevent Rapid Growth that Kill Your Business

We are witnessing a flux of entrepreneurs with new ideas of emerging market trends. Some of them made a fortunate with success and went out of business in a blink of an eye. Let’s us move on with factors effecting your businesses.

1. A good sales with no margin

Some of entrepreneurs curious why their business is hurting even though they sell at higher than cost prices. Novice entrepreneurs often encounter this problem, most of the time it means your pricing is off. It’s due to product cost-based calculation and neglecting overhead costs.

For example, when a seller aimed at selling for 2,000THB margin and forget to include related expenses in product cost and lump sum could be at 3,000THB i.e., petrol, expressway tolls, traveling costs or even seller’s own labor.  No matter how good the sales is, you will never be profitable.


2. Wealthy but Negative Cash Flow

 Some entrepreneurs are good at selling their products or services to many customers. Some might notice a negative cash flow. One of many reasons could be giving out long credit terms while struggling with payment to suppliers, labor, rental payment or staff salary. 

When you have to make ends meet with expenses and overdue payments, it shows a sign of unhealthy cash flow. You would resort to borrowing from many sources whenever cash flow became negative, which is simply damaging your business. When you are paying interest for all borrowed revolving cash flow, you simply making profit for your debtors, not your business.

Cash flow management is crucial for any business, receivable income should be collected from client as fast as possible. Utilize your cash flow by paying debts within due date to prevent charging of default interest.

3. Not Keeping Personal and Business Finance Seperately 

Many novice entrepreneurs might not be able to distinguish between personal and business funds. They often spend their profit money with mentality of spoiling what they deserve. Subsequently, business funds are being spent on personal shopping, foreign country trips or for their children education. At one point, they will realize how they exhausted all business funds or worst if they are subjected Revenue Department business review and failed to declare the missing funds. 

Therefore, keep your personal and business finances separately and prepare a business cashflow record for review and utilize the funds to achieve business objectives. Our personal finance came out as the business employee benefits i.e., wage or salary. Get your own personal finance record for affluent financial planning and to spend what you have after savings and invest to achieve personal financial goals.

Therefore, no matter how good the business is, it can kill your business if you don’t keep personal and business finances separately. Financial health review is also significant for all entrepreneur for the ability to monitor both of their pockets.