← The $100 MBA Show
The $100 MBA Show
MBA2487 How to Not Go Out of Business
00:12:59
Ever wondered what it takes to ensure your business doesn't become just another statistic? Curious about the fundamental strategies that can keep your enterprise alive and thriving, even during the most challenging times?
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Hey, welcome to the Hundred Dollar MBA show, where we serve practical business lessons on a silver platter. I'm your host, your coach, your teacher, Omar Zenholm. And today we're tackling a topic that hits home for many entrepreneurs. How to not go out of business. This episode is all about keeping your business alive and thriving, even in the toughest times. I wanted to do this episode because it seems like a lot of businesses, even just in my local area where I live, are going out of business. Businesses that have been around for decades. The yoga studio that Nicole goes to on a regular basis, just went through liquidation a year ago. This is when a business can't pay its bills anymore. They're just not making enough money and there's no way possible for them to pay their debts. It's like a sale and a state of bankruptcy. The scraps get eaten up or bought by a new buyer. But many times the reputation of the business never recovers. So in today's episode, I'm going to share with you 8 tips, 8 things to keep in mind so that you do not go out of business. The name of a game in business, in life, in any career, is to stay alive, to keep on growing and not die. So let's make sure of that. Let's get into it. Let's get down to business. I want to start with a dose of reality. One of the biggest mistakes entrepreneurs make is thinking they're invincible, thinking that going out of business won't happen to them, that it can't happen to them. When you think this way and you think, oh, this will never happen to me, I'm savvy, I'm smart, I work hard. When you think this way, you are unprepared because you're not even entertaining the possibility that things can go south, that things can change, things out of your control can change. Today's episode is all about being prepared, being vigilant, and knowing how to adapt. The entrepreneurs that do this are the ones that stay alive. So don't be overconfident. Don't be cocky and think this can never happen to you. Let's start with tip number one. Huge. This is the number one reason why people actually go out of business. They don't adhere to this. And that is knowing your numbers. You gotta know your numbers. I can't stress this enough. Understanding your cash flow, knowing when your break even. Point is keeping an eye on your profit margins, reviewing your financial statements regularly. I've been doing business for over 20 years. I have a profit and loss sheet that I look at almost daily. This is not just for beginners, okay? Keeping an eye on how much money you're making and how much you're spending is incredibly important. Do not delegate this to anybody else. Do not delegate this to a bookkeeper and accountant. They have to keep an eye as well. But you have to be ultimately responsible. It's too critical for you just to rely on somebody else to make sure your business is going to survive. And the numbers are straight. The more you know about your financial health, the better decisions you'll make. You'll know how to reinvest your profit. You'll know when you need to cut back. You'll know when you can't afford that hire. You'll know when you need to sell more product or have some more expansion revenue. The point here is, is if you don't know your numbers, you don't know how your business is doing. End of story. Look at it this way. If you were to invest in another business, what's the first thing you're going to want to see? The numbers, right? How is this business doing? What is the health of this business? It's like a report, a doctor's report of the business. Know your numbers, be on top of it, and know the key metrics that you're trying to follow. Whether it's profitability, growth rate, revenue churn. All these numbers are so important because you want to make sure you're moving in the right direction on a daily basis. It's only going to take you a few minutes a day, but it's going to make all the difference in the world. Number two, listen to your customers. You have one huge stakeholder when you are a business owner, and that is your customers. You might have partners, you might have investors, but without customers, you have no business. Your customers are the heartbeat of your business. This means you need to listen to them, get their feedback and use it to make improvements. Listen. A lot of people think, oh, my customers don't know what they want. You know, Steve Jobs never asked his customers what he wanted. He came up with his own idea, so I'll do the same. This is totally false. Apple listens to feedback and has been listening to feedback from day one. Listening to feedback doesn't mean you have to do exactly what the customer says, but you have to listen to the feedback so you have some information and understand what your customer is going through, what pain they're going through, so you can solve their problem better than they can even think of themselves. And happy customers are loyal customers, and loyal customers will keep you in business. Don't just hear what I'm saying. Really listen and act on it. How many customer interviews do you have on the calendar right now? Right. Are you going to be speaking to your customers anytime soon in the next quarter? Well, make sure it's on the calendar, okay? How many surveys are you sending out? Have you met any of your customers in person recently or got them on a video call? Speak to your customers. Tip number three, Adapt or die. So many businesses go out of business because the market changes, the climate changes, the demographic that they're serving is no longer interested in what they're offering, and they just die. They get stubborn. They're like, no, this is who I am. This is who I serve. And they don't change with what's going on. Here's the reality that I've learned in the last 20 years of being an entrepreneur. The business landscape is always changing. The words that used to resonate with people, the words that you say in your marketing, change. What worked yesterday might not work today. Stay flexible. Be willing to pivot and keep innovating. The reason why you got your first customers in the first place is because you were adapting to them. You were innovating. But many people just stop doing that after the initial phase of starting their business. Look for new ways to serve your customers. Continually, continually improve your products and streamline your processes. If you're not moving forward, you're falling behind. One of my favorite examples of this again is Apple. Apple's notorious for cannibalizing its own products. Apple had a hit on their hand with the ipod, where you can listen to a thousand songs. And then they innovated and came up with the video ipod where you can watch videos on your ipod. Where's the video ipod now? Doesn't exist. Why? Because Apple created the iPhone, right? And the iPhone replace its own product. They cannibalized their own product because it's better for them to do it to themselves than the competition to do it to them. Tip number four, Be a great leader Leadership is key if you want to have a strong business. Inspire team, motivate your team. And you don't do that by just sending out an email or a Slack message. You got to be present, you got to be around, you got to lead by example. Show them that you're committed to the business's success and you're willing to do what is humanly possible to make sure they're successful too. Leaders invest in their team and their growth. So invest in getting them some courses or some training that they can help make them a better professional. In my companies we ran regular trainings and retreats, in person retreats where we take them to a new fun location and we learn and grow together. During COVID we did it online and a great leader is honest and transparent with its team. A great leader can turn challenges, problems in a business to opportunities to keep the team focused and driven. Right? Reminding them of their mission, reminding of what you're trying to do here. It's a great practice to just be honest with your team and say, hey, we're in a tough time right now. We're going to have to work a little harder or we're going to have to think a little bit more creatively. These are the problems we need to solve together. Let's do this. Tip number five. Build a strong team. You're only as strong as your team. This is how you compete with the competition. Who wins in a competition? The stronger team in sports and in business. Hire people who can not only do the job because of their skills, but also align with what you're trying to do with your vision and your values. I like to take my time in hiring great team members and seeing it as a long term relationship. I'm willing to invest in and make sure that they feel supported and that they're doing their best work. Building a strong team doesn't only mean hiring, but also means improving and supporting the team members you already have. Tip number six and a lot of people don't like this one, but it's super helpful and that's plan for the worst, hope for the best, but plan for the worst. Having contingency plans ready and in place for all kinds of scenarios, economic downturns, losing a key client, supply chain issues. Make sure you have an emergency plan that goes along with an emergency fund to cover these unexpected events. If Covid taught us anything is that things can change really quickly. Be prepared. It can make the difference between surviving a crisis and shutting your doors. Tip number seven, Keep an eye on the competition. Don't obsess over the competition. Don't look at what they're doing every single day. Don't make it your full time job to see what they're doing, but don't operate in a vacuum either. Keep an eye on what the competition is doing. Learn from their successes, but also from their mistakes. Just like you make mistakes, they're gonna make mistakes now. This isn't about copying. It's about understanding the landscape and finding your unique edge. It's actually doing the opposite. Say, okay, this is what they're doing. What are we doing to differentiate? Stay ahead of the curve, but stay informed. And finally, tip number eight Take care of yourself. You can't forget about taking care of yourself. Running a business is all consuming and burnout is real. You just can't be grinding and hustling and working 247 sustainably. I tried. Trust me, I've did it. And it's not really the best idea. Make sure you're maintaining your health. Make time for exercise. Make time for downtime. Make time for reading. Not in excess, but make some time. When you're at your best, you can lead your business at your best. One of my favorite thought experiments is by Warren Buffett. Warren Buffett said, imagine, I gave you any car you want, but the only caveat is that you have to keep that car and it's got to be the only car you have for the rest of your life. Okay? Now how well would you take care of that car? You would keep it spotless. You would drive it with care. You would make sure that the oil is changed before it was due? Well, that's you and your body and your mind. You only got one to live with. You got to make sure you nurture it. You take care of it so that you're at your best and you give your team everything you got. So there you have it. Eight solid strategies to help you avoid going out of business. Remember, staying in business is about being proactive, about being flexible. It's about being prepared. Don't be another story in the newspaper. Don't be cocky. Don't be overconfident to think this can never happen to you. It can. It happens to the best of them. I know you got this. Thanks for listening to the $100 NBA show. If you found today's episode valuable, please share it with a fellow entrepreneur. Send him a text message with a link to this episode or even just the name of this podcast. The $100 MBA show. Pop it in your favorite group chat on WhatsApp. Spread the word and help us grow. Thanks so much. Before I go, I want to leave you with this. On more than one occasion in my business journey, I was in a very critical point where going out of business was not far fetched. But because we were prepared, because we knew what to do, because we knew how to pivot, we survived it. And in fact, after going through it, we grew. We became stronger than we ever were. But if we thought this would never happen to us and just buried our head in the sand, I'm telling you, I probably would not survive that business. I would go out of business. This is where I got these eight tips from because I knew exactly what made us survive. It's not a fun place, it's super stressful, but it's actually really something you're going to be proud of when you survive it. When you get through it on the other side, you're like, wow, I actually pulled it out and I made it happen and we're better for it now. Thanks so much for listening and I'll check you in the next episode. I'll see you then. Take care.