For those of us who grew up with parents who worked for … rather than owned them, the world of business can be quite a mystery. Even more so if we’ve dared to try to start one of our own.
There is the factor of what type of business to start – a product or service business. There are the issues of doing a good market analysis, licensing the business, understanding the codes of law governing businesses, and determining just what type of business structure to choose – especially if the business will have employees.
For example, should we start a sole proprietorship or a corporate business? It’s a lot to work on, and it’s not an overnight process on the road to success. But, the most crucial challenge to whether a business succeeds or fails lies deep within the realm of emotional versus financial intelligence. Many start-up businesses fail within the first year of existence.
This is especially so with businesses started from home, or exist without the traditional bricks and mortar structure we are so accustomed to. And, far too often, many start-up businesses fail due to the emotional challenge the new business owner faces. The challenge of seeing yourself now as a business owner, rather than a paid worker for someone else’s business.
It means dressing differently, thinking differently, and talking differently. It means believing that you are already successfully established even if you have a long way to go on the business’s balance sheet. To put it simply, if the business owner doesn’t have a firm belief and commitment in the business and his or her role as the owner, then others simply won’t be convinced that this business is the place to get what they need.
Then, there is the crucial issue of having the financial intelligence to keep the business going in the direction the new owner desires. To put it simply, if the new business is only taking money to operate and not making money, it won’t be long before the doors of opportunity become closed.
No matter how much motivational self-talk and emotional pump-me-up the new business owner does, it is the results shown on the bottom line that determine the future of the new business. And, if the bottom line is steadily generating a negative, the business will eventually lose.
Far too many new business owners simply don’t understand this simple fact and it’s incredible impact upon the future of his or her business. And, far too many system-based business endeavors, such as network marketing, fail to properly focus the majority of their teaching on this.
To keep the vision, motivation, commitment, and, ultimately, the business alive, a start-up business owner must simply know the ins and outs of basic business accounting. The more he or she comprehends the principles of good financial management, the greater the chance of achieving the desired goals for the business.
It is, ultimately, the financial bottom line that determines whether a business owner maintains the beliefs and dreams associated to his or her business. The financial bottom line determines just how much commitment to marketing and advertising the principal staff of the business will willing to give.
It’s very encouraging to develop a love for numbers, especially when working with the basic additions, subtractions, multiplications, and divisions of the financial budget. Many schools of thought teach that marketing and advertising is the key to success in any business.
To their credit, there is a certain truth to this, because the market is a numbers game. The greater the number of people that know about the owner’s business, it’s products or services, the greater the chances of getting the sale. Understanding the numbers allows us to measure where we are and where we want to go. But, regardless of how successful the new business owner is with marketing and advertising his or her business, no amount of business exposure alone can guarantee the success of the business.
There are big businesses that are testimonies to this fact with their sudden bankruptcies at the time they seem to be at their greatest. Ultimately, the deciding factor on whether a business succeeds or fails lies in the level of knowledge and expertise that the principal players of a business have with the business balance sheet.
This level of knowledge also determines just how much belief the business owner has in his or her business, and how willing he or she is to make the necessary efforts and adjustments that steadily drive a business up to the road of success.
And, once reaching this point where the customers and clients are knocking at the door and the money is rolling in, it is the degree of financial intelligence that will ultimately determine whether the business stays in business or not. And, no amount of motivational self-talk or marketing is likely to change this simple reality.
What this means for those who are just starting a business or are struggling to keep a business idea alive, is that it is imperative to develop a deep appreciation – if not love – for numbers and how these numbers play out on the business balance sheet.
If the business is progressing positively financially, the rest of the aspects of running a business will fill itself in over time. Isn’t it a lot easier to learn the ends and outs of operating a successful business venture and maintaining the commitment and motivation to the business vision when the business is steadily in financial growth? Something to seriously think about.
Especially, if owning a business is an appealing idea, but is equally as much a mystery to the aspiring entrepreneur. The key to success ultimately is determined by the plusses and negatives found in the business’s balance sheet. And, a focus on this will dispel many of the mysteries and emotional challenges to owning a business.
THE AUTHOR: Joseph T Farkasdi
