Running a successful business is no children’s play. One has to encounter several problems managing the business well. With inconsistent economic policies, changing governments, inflation, cash flow problems, variation in labor and raw material cost it is really tough to manage business. For managing the show successfully, one needs to be very careful and should keep some frequent problems faced by individuals in mind to overcome as and when time comes. Some of the common problems which one generally, faces while running a business are:
Lack of cash flow: cash is the life line of any business. It is necessary to have adequate cash to run a business successfully. Lack of cash flow can lead to insolvency in the long run. This problem arises when you give long credit periods. It is always better to give 1% or 2% cash discounts to encourage people to release payments well on time.
Changing Government or Economic Policies: every single change in government or economic policies, the business policies and strategies suffer a great deal. Every increase or decrease in the price of products or rates of taxes the business suffers either positively or negatively. For example change in export or import policies affect the business house which depend on either of them. Every single penny increase in price of fuel can also lead to significant changes in the business.
Varying labor and raw material cost: in present scenario there is shortage of labor and raw material, owing to the economic recession. It has become really difficult to procure labor and raw material at economical prices. Lack of track records: it is very important to keep up-to-minute track records of inventories, sales and purchases. This will help you keep a track of all the money and you can see where to cut down cost to make maximum profits.
Tough competitors: it is almost impossible these days to have monopoly in any products or services. One has to face large competitions in all walks of business. From procurement of space, procurement of labor, raw material and necessary services, one has to compete with various other who are seeking the same services. Keep buyers and suppliers intact: it is very important to maintain your buyer and supplier list. Try and keep them happy and satisfied for as long as possible. Offer them cash discounts and if possible offer longer credit periods. Entertain them timely and listen to their grievances patiently and reply politely. This will help you in strengthening your long term relations.
Accounting and taxes: it is the most problematic area of running a business. Maintaining up-to-date accounting books is quite problematic at times. It is better to appoint professionals to keep accounting and tax related documents ready. Accounts help you to know the real position of the business, as to what is the status of it, where is it actually heading. Is it profitable or needs certain amendments in the procedure to manage the things.
Natural Disaster: natural disaster is the most unforeseen danger. It is almost impossible to prepare yourself against the unforeseen calamity.