When starting a business, there is quite an amount of uncertainty that goes along with it. In addition to this, there is a lot of chatter going around about one thing being good for business and the other not. A lot of these have always been and will always be just a myth.
In this article, I will be discussing 7 of the most common myths, along with their truths.
Myth 1 – Sales are everything:
Even though it is important, it is not everything. The more important thing to look at is the cash flow of the business. Sales might be looking up, but if there is less money at the end of the month than at the beginning, something is wrong. Learn to use a cash flow statement. It will do wonders when it comes to control over cash flow. Then make sure that your company’s profitability is up to standard. For example, the standard profitability percentage for companies in the sales industry is >20%. Meaning R 1 million in sales, of which R200 000 is profit. It does not make sense to sell R 1 million worth of goods, but after all your expenses has been deducted, you only make R 5 000… Wouldn’t it be better then to only have R100 000 in sales, but R 20 000 in profit?
Myth 2 – Low prices will bring customers:
This might have just a little bit of truth in it. Customers are always looking for a place where they can get the best deal, but they also want quality. If you offer a lower quality item at a low price, it can have a short term effect. Sooner than later the customers will figure out that the lower quality product will cost them more in the long run. They will usually pay a bit more for a better quality product.
Myth 3 – Quality products will yield customers:
This might seem in contrast with the previous statement. Truth is you can not have a good quality product and assume that your profits will increase. You should put effort to market the product and let the customer know about the product you are offering them. If you over price the product, it will also not be as profitable as you thought.
Myth 4 – Under-promise, but over-deliver:
This has been a popular saying in the business world for a long time. The problem with this statement is that if you under promise, the customer might feel that he/she can get a better deal at another place. Sell your business for what it is and what you can deliver. This will give the customers a better idea of your business and you can work harder to top what you promised.
Myth 5 – The customer is always right:
There are a lot of different people in South Africa. All with different ideas and different backgrounds. You will never be able to run a business where you believe that every customer is always right. Set a basic level of service and standards and make this clear to the customer. This will be able to give them a better idea of what to expect and to set their expectations in accordance with that.
Myth 6 – You will have more time:
This is most probably the biggest myth of them all. When starting a business, you will have to get a lot of things in place. This will ensure that your business will take off and be successful. Even after a few years, you will undoubtedly still have to work very hard. The work you put in will eventually reflect on your income at the end of the month. Even when you are not at work, your business will be mentally more demand than a normal nine-to-five job.
Myth 7 – The product will sell itself:
This is true, but you will still need marketing. If you have this wonderful product, but nobody knows about it, what is the use? You will have to let people know about your product so that you can sell it to them. If they do not know about you, they will not be able to buy from you.
With these myths out of the way, I think that you will have a better understanding of what it is to start a new business. Proper planning will always ensure that your chances of becoming successful, is drastically improved.
A great place to start is to register your own company. Start today.