Running a business can bring in lots of money for you and your family yet you will have to make sure that you have learned the ropes and make the right decisions else you end up pouring your money down the drain, so to speak.
Business News Philippines has shared with you plenty of tips and guides to help you start and run your business but we could only do so much. Everything still boils down to your decisions and management skills. But we’ll try to help you in every aspect of your business.
Now, while planning on starting a business, there are financial issues that you should not ignore since these could have a huge impact on your establishment later on.
Location and Building Costs
Finding the right spot for your shop is a vital matter you must address before you start your business but this involves a lot of financial considerations. First, how much is the rent/lease?
How much are you willing to spend on renovations to make the building look more appealing to your customers and appropriate for your business? This is a serious matter to take into consideration, considering that renovations do not come cheap.
Can you afford that amount and do you think you can earn enough profit to cover these costs?
Wages and Salaries
Different places have different rules on minimum wage but you have to determine whether you only give your workers the minimum wage or offer them a competitive package. How many employees can you afford to pay and how much can you afford to pay them?
Also, you must consider that more experienced employees and higher ranked workers are expected to have better salaries than newbies and lower ranked workers – but how much should be the difference? You might need to consult human resource (HR) experts on this one.
Taxes and Rent/Lease Rates
Different locations also have different tax and rent/lease rates. For example, spots within the business district and in key locations in the city are expected to have higher rates yet these are also the places where you can expect to have more customers!
The best thing for you to do is to make a feasibility study or have someone assess your options so you could find the best option for your business – whether it is to pay high rent in a prime spot (but possibly selling products at higher cost) to gain more customers or to choose a cheaper spot (and sell products at lower cost) but at the risk of finding less customers.
Sales and Inventory
Consider your sales and regularly make an inventory of your products to determine whether the business is gaining or losing money.
You should not expect to receive a high return of investment (ROI) in the first few weeks of doing business but if it has been a year and you are still losing money, it might be time to move your business someplace else.