Most of my experience in business has been in a service industry with high profit margins and minimal expenses to render said service.
Now what this sort of business does is obscure your weaknesses or at least paper over your inability to manage your finances well.
The real test came when I found myself running a bottle store and all my weaknesses were laid bare. In a high volume low margin business if a dollar goes missing or empty bottles and crates go missing it complicates and affects the bottom line and will run that business to the ground. You cannot even afford to take money from the cash box for personal use ẃithout compromising the business.
Through that experience I’ve grown to respect vendors and any people who work tirelessly to earn a dollar of profit and save it.
It’s not easy as Tendai Biti famously remarked when he was the minister of finance that we should only eat what we kill.
So in the daily running of any enterprise, however big or small always remember that every dollar counts. The sure fire way to mess up your business is to ignore this principle and plough through the profits.
So as a rule of thumb :
- Always account for every dollar that goes in or out of your business.
- Be aware of the costs involved in everything you aim to sell.
- Prepare a budget and adhere to it.
- Never spend the principle capital or you won’t be able to purchase new stock.
- Learn to save and reinvest your profits into the business and be patient, you can’t “pull up the flowers to see how the roots are coming.” and expect to yield a healthy crop ?.