How is everyone? Hope everything has been great and if it is not great, it definitely can be better 🙂
We are in the last few weeks of 2017. Time flies~~ Are you reaching your 2017 goal? I hope you are.
But I am not. Sighed~~~ I went back to work for my boss after my product failed miserably. Every time I failed, I learned something new.
This time round: Cash Flow
In order to sustain a business, you need to have cash flow. If you do not have cash flow, you will not be able to last. This applies to even your physical offline business. Cash flow is the movement of your money.
Without incoming cash flow, it is hard to continue to invest in your business. This actually reminds me of what Duke Chiu used to tell us why operating a business is not for everyone. You need to have at least 3 pools of funds to last you for 6 to 12 months.
1) Operational Fund
2) Self Expense Fund
3) Investment Fund
I totally underestimated and overlooked on this area.
Operational fund refers to the money that are required to continue to operate the business. This is your usual fixed cost. If you are operating an business or a stall, they are your manpower cost, rental fee, electricity and utilities bills.
Self expenditure is simply the amount of money that you need to continue to carry out your daily activities. They are basically your food, transport, leisure, bills and insurance coverage (if any). This can be control by you if you are very disciplined in your expenditure.
Investment fund is your additional marketing cost or any expenses that you have incurred in order to improve your business.
Why Is There A Need To Have These 3 Funds?
That is because we are working on an assumption that for the next 6 to 12 months, your business might be making losses and there is no profit at all. Hence there is no positive cash flow and that means you continue to spend out of your own pocket.
Are you able to continue “bleeding” until you see your balance sheet turns from red to black?
The truth is that a lot of us are unable to. I did not even last for 6 months.
Worst, for those who are not prepared or do not have a business owner mentality, maybe after 1 month, he will give up.
It is not easy especially when you are squeezing out every single cent to make your business grow but you are just not getting returns yet.
Can Your Mind Take It?
Can Your Body Take It?
Can Your Bank Take It?
No to any of the questions above will give you doubts about your business and cause you to waver.
This is why not everyone succeeds in growing their business.
Even in the internet marketing industry, only 1 out of 10 product launches will be major success. The other 9 may just be a waste of time, money and sweat.
Even if you are operating an online eCommerce stall using Facebook Ads for promotion, are you able to continue to pour in money to Facebook Ads to keep finding the winning product and winning ads? If you are lucky enough, then you find the winning combination in a few weeks but if you are unlucky, can you last for a few months to a year, incurring losses after losses?
Not everyone can. But those who continued to preserve reap the rewards at the end.
One key advantage about doing an online business is that it costs substantially less amount of investment as compared to the having a brick-and-mortar business. Also, you are able to do it part-time when still holding on to your full-time job.
But this becomes a double-edged sword as you might not be serious enough with the online business and have a mindset that you can always fall back to your job. Unfortunately, a lot of people who started online business have this kind of mindset which is a major success killer.
Online business is also NOT an overnight get-quick-rich scheme. You need to put in effort and please do not expect money to fall from the sky.
I hope you like the truth that I shared today and have a great weekend ahead.
Feel free to drop any comments below to let me know what you think.