Tuesday, April 5, 2011

First Step In Starting A Business - A Rule to Understand

In the movie “Wall Street” Gordon Gekko said to Bud Fox “First Rule in business. Never get emotional about stock, it clouds your judgment.” I would like to add an additional rule of business. This is a rule that a business owner needs to be consistently mindful whether they are currently in business or just Starting a Business.

The rule is "there is simply no state of neutrality". Your business is either going up or going down. Let’s say you are doing 1M in sales in a year and from that you as the owner are able to take a 100k salary per year salary. Let’s say that a 100k per salary is very comfortable for you and you can see yourself living comfortably with that salary for the rest of your career. So you try to develop a strategy to do 1M per year every year. My point is that no matter how great that strategy sounds it is likely to fail. Since there is really no state of neutrality if you are not striving to increase you will probably decrease. I know things can feel very comfortable with a certain sales volume but in business, things can get very uncomfortable in a hurry by just a few unfavorable events. If you are a business owner you must understand that something always challenges your business, whether it is losing a big customer, the economic conditions are down, your industry is down or anyone of a million other things go wrong. Since this condition of “something always challenging your business” always exists you must always figure out how to increase sales. You as a business owner must always be proactively seeking ways to do things more efficiently, more profitable and you must always seek ways of increasing sales because there simply is no state of neutrality. Whether you are currently in business or just Starting a Business please keep this rule in mind.