E-Commerce has taken a giant leap with internet availability spreading. Internet has made it possible for small entrepreneurs to leverage their business. More and more people are working to build their business online as this is the future. However there are certain risks of online business that should be considered.
Hacking of website – This is the biggest threat for a new entrepreneur. Generally a new business online is unaware of the plethora of hackers waiting to pounce on sensitive data. The data of potential clients that you have gathered working day and night could go in seconds. The solution is to keep up the security of the website and also have a backup of sensitive data.
Downtime Risks – If you have not chosen your web hosting smartly your website could have unexpected downtimes. This is really damaging for online business. The customers will go away if the website is down when they look at it. The way to counter is to choose a reliable web host and minimize down time.
The Google Algorithm – Online marketing is real with online business. Being on top in Google searches is a must. However take care with recent algorithm changes in Google search. You could be penalized if you do not know how to advertise without going against the new terms and conditions.
There has been a paradigm shift towards startups in the last decade. The spread of internet as a mode of communication has enabled new entrepreneurs. Communication and disseminating information has never been easier. However the business to be successful needs to do some specific things. Major characteristics of a successful business are:
- Clear cut Objectives – A business which is successful has well-defined objectives. It leads to goals and operations being robust and well-directed. The objectives act like guiding light for the business.
- Planning – Planning is the key to meeting the objectives of business. A well-made plan is vital to success in business. It also helps in removing uncertainty to a certain degree. Cash Loans can help while planning to meet immediate expenses of business.
- Periodical Market research – In the present scenario markets and consumer tastes are changing rapidly. Therefore periodical market research has become essential for knowing the needs and modulating the product/service according to consumer preference. Small business have greater flexibility in making changes. Country of origin labeling is one such thing which helps categorize.
- Employee Involvement – Gone are the days when the employees used to toil hard without being a part of profit. The right way is to include the employees and make them shareholders. This way they will have reasons to work hard. Better talent is essential for business success and involving employees helps attract better talent.
- Presence on the Web – In this digital age traditional way of setting an office does not work. Business will need to have presence on the internet. Convenience of this medium and the power it has should be acknowledged.
It was an article that got me excited about finance, and then I started my journey to learn more about it. I spent more than 200 hours with senior chartered accountants to understand numbers, to demystify numbers for a layman. Throughout this blog I will be using my philosophy which is KISS – Keeping Information Simple and Specific. Albert Einstein very beautifully said – “If you can’t explain it simply, you don’t understand it well enough”.
There is a qualification criterion to read and understand financial statements. This is the yardstick that I use to find out if my clients qualified to read and understand financial statements. Let me use the same thing here. It is a trade secret which I do not let out but now will
If you think you can read and find meaning from the above picture and it makes sense, it simply means you are qualified to read and understand financial statements. Does that mean you should learn tennis. Well it is not that. If you can read numbers you are qualified to read Financial Statements
Business is Simple
Business is not complex but very simple. Just follow the simple rule – Earn more, spend less.
While doing business when we add the transactions that involve money coming in and Money that is supposed to come in, it is the total earnings, and when we add money going out and the money supposed to go out it is the expenses or spending.
When the income is more than spending the business will make profit. It is so simple to do business.
Why understand numbers?
Whenever I meet business owners and decision makers I try to explain to them the importance of understanding finance and numbers before making any decision. Almost every time their immediate reply would be – Why should I understand numbers? I have got a book-keeper. I have got an accountant. We have a CFO. We have a finance department.
Well friends Rich dad said, “If you want to be rich, you’ve got to understand numbers.” That is why a person’s financial statement becomes their report card once they leave school. These are the words of Robert Kiyosaki. My mentor who got me into finance said – “Sooner or later everyone realizes that their ability to lead successful business largely depends on their ability to read Balance Sheets”.
Jack Stack author of the great book ‘The Great Game of Business’ said –“If people know how to use a financial statement, that’s really the simplest way to run a business”. These are not simply quotes but essence of business as stated by experts.
If I can understand numbers, even you can!
When I make my clients understand the importance of knowing numbers before making business decisions, their immediate reaction would be – Micahel do you think I can really understand numbers? Do you think I can read a financial statement? I was not good at math when I was in school. I did not study any subject related to accounting, when I was in my college. Well friends let me tell you something. Even I do not have commerce or accounting background. I am a Civil Engineer. I did my masters in Entrepreneurship but finance was not my main elective. What I am trying to say is you do not have to be a mathematics genius. You do not need to have any kind of finance or accounting background to understand reading financial statements.