In my previous blog posts, I shared with you the first three Smart Strategies to Scale your Business. Here’s a quick recap of what they are: People, Strategies and Execution.
The fourth and final Smart Strategy centers around Cash.
Obviously, cash is important because we all need it to live and to pay our bills. It also gives us a sense of freedom and security.
But it’s also the #1 reason that small businesses fail. Not cash per se, but the lack thereof. Also known as undercapitalization, which simply means that the money has run out. The concept is simple, but the root causes of undercapitalization are more complex.
Knowing the factors that lead to it can help you prevent it from happening and one such factor is not being able to weather the storm. Your school is going to ebb and flow over time and you’ll want to ask yourself if your business is prepared to handle an unexpected emergency. Unfortunately, most business owners don’t prepare in advance and the unexpected can be your school’s greatest vulnerability.
Experts differ on how many businesses fail every year. Some have reported 3 out of 4 startups close their doors, while others say, depending on the industry, the failure rate is closer to 50 percent.
How your school responds to an unexpected event affects its credibility and resilience. Can it bounce back quickly without a lot of disruption? Will restoring your school to its pre-crisis status require aggressive tactics or will it fail to survive? These are all-important questions you should ask yourself and be able to answer honestly.
Not being disciplined is another factor that can have adverse effects on your business if you’re not careful. Once you make more money, discipline yourself to live on less money. You don’t need to be all highfalutin and wear nice, expensive clothes all the time. Live within your means to the best of your ability at all times.
When you don’t have enough money to pay your bills or pay your staff, you’re under tremendous psychological pressure and that means you’re more likely to make poor decisions, which can easily have a snowball effect.
Remember that marathon mentality I talked about in an earlier blog? Most people have a sprinter mentality and you need to constantly remind yourself that you’re in it for the long haul and make your decisions accordingly.
It’s also good to have Cash Acceleration Strategies (CAS). Set specific goals and take specific actions to meet those goals. Should you save or earn money? The best answer is to do both and find a good balance of each. Set realistic goals, develop holistic strategies and reap the rewards sensibly. I really think there’s some truth to the phrase “slow and steady wins the race.”
As we wind down, let’s recap the 4 Smart Strategies to Business Scaling. They are interdependent and include: People, Strategies, Execution and Cash.
At the end of the day though, you have to do what feels good for you and what makes sense to you, as a business owner.
Wishing you very best,