It is important to keep life simple. Below are the Five Blunders that can sink your business.
- Worshiping High Profit Margins—When you try to maximize your profit margins you will also maximize your competition. Instead of focusing on profit margins, focus instead of increasing your Free Cash Flow (FCC). This is defined as income from operations minus capital expenditures. Use FCC to obtain market share.
- Financially Starving the Opportunities & Feeding the Problems—we are all victims of inertia. Old problems keep you stagnant whereas new opportunities are potentials for growth and can bring in much needed revenue and new customers.
- Neglecting the Top Line (Sales)–Unless your sales and revenue are growing, your bottom line will eventually shrink. Think of the top line as the potential energy of the firm. The greater the potential energy of the firm the more leverage and opportunities you have to expand your market share.
- Straying From Your Core Business–Don’t go into a business that you know nothing about. It’s foolish to branch out if your second business doesn’t increase your sales significantly and adds to your Free Cash Flow. There is a wise investment saying that says Never Play Another’s Man Game. Stick with your game.
- Planning Your Business in an Economic Vacuum –You do not live and work in an economic vacuum. You can develop the best business strategy that time and money can buy, BUT if it is not in harmony with macro economic trends, you can stumble badly.