Entrepreneurship is not easy. Being the boss, the one ultimately responsible for every aspect of your organization is a daunting task. It is only after starting a business that most people realize how much time and effort goes into running a company efficiently.
Most business owners would focus on their product or service, their customers and of course the people working in the organization. This is of course a good thing and most of your time and attention should be given to these three aspects of any business.
However, there are a number of other crucial things that are almost equally important but often ignored by most entrepreneurs. These are aspects that can make or break a business. As a new entrepreneur or even an established one, it is important these other functions are given significant importance to ensure long-term health of the business.
Three such aspects that cannot be ignored by any entrepreneur are as follows:
1) Risk Management
The first question that would come to your mind is, What is Risk?
Risk can be anything that has the potential to cause sudden damage to your business. For example, there could be disruptions in your product supply chain. There could be losses due to unforeseen weather situations. In the recent years, many companies have been affected by cybersecurity woes.
Risks can take multiple forms and can attack at any time. It is important for an entrepreneur to think about the potential risks facing their particular business. When you do figure out the most significant risks, you need to then plan for it.
Planning can be again broken down into various aspects. Some entrepreneurs simply get risk insurance to mitigate the potential losses. Some think of various Plan B and Plan C options if their primary sources get affected. It is up to you and your business to understand what risks you face and how to manage them. However, if you do not plan for risks, then you are opening your business up to a sudden attack that can happen at any time.
2) Competitor Analysis
It is good to understand your product and your customer. However, it is equally important to understand your competitors as well.
Competitor analysis should be a mandatory task for all top management of a company. You need to understand what your competitors are doing, why they are doing it and the strategy they are following.
Typically you would have many tools and analytical software available online for competitor tracking.
Competitor analysis can also be done in order to understand the marketing strategy of other companies in the same line of business. Some entrepreneurs perform competitor analysis for digital marketing campaigns. Some do this for branding purposes. Competitor analysis is an important tool for any company and it will help you in understanding your customers as well and how to reach them effectively.
3) Finance and Accounting
Too many entrepreneurs are leaving the numbers side of their business to professional accountants. This is a really bad practice.
Yes you do need accountants and people who know how to maintain financial books. However, you as the entrepreneur should know every number related to your business. This includes your annual as well as quarterly turnover, your gross profit, your net profit etc.
If you cannot remember numbers, simply save them in a spreadsheet or write in a notebook and keep referring to them. You need to understand every financial aspect of your business. Supply chain costs, product or service final costing, wholesale price, retail price, monthly overheads, fixed overheads, variable expenses etc. Once you have a good grasp on the numbers, your management skills will automatically get better and you will be able to create a good financially viable business.