Controlling Costs Key to Running a Business

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rolling Costs Key to Running a Business

By: ARA Content

(ARA) - With more and more small businesses and dot.coms going bankrupt these days, businesses are developing new strategies to stay in the game and obtain a profit at the same time. More than ever, not enough emphasis is being placed on controlling costs.

"Increasing sales is overrated. The old adage that volume cures all ills is outdated and moldy," explains Patrick Bruce, senior business analyst for The Bankcard Store. "I was brought up under the guidance of independent restaurant owners, whereby the net bottom line profit was all that mattered at the end of the night. It wasn't until I started to work for McDonald's in the 1970s that I was made aware of the need to increase sales each and every year. At McDonald's, marketing was king, and the way you decided whether that marketing was working was to compare year-to-date sales."

When sales are the primary focus, the net bottom line becomes a secondary issue, and that can become very dangerous. Bruce explains that when the focus is on sales, the staff can become complacent and the importance of the little things that rob a business of its net profit's daily can become lost.

Some business owners today do not understand how much money they leave on the table each day because they haven't taken the time to put "profit gauges" in their business. Profit gauges are important because they can tell you at any given moment if the business is running the way you designed.

"It always amazes me," said Bruce, "when I visit a client and they have these beautiful cars with high-tech gauges, oil gauges, digital radios and much more. Yet, when I ask them what gauges they use in their business they inevitably answer 'monthly financial statements.' Can you imagine if you only looked at the gauges on your car once a month? Yet most business owners spend more time worrying about their gas mileage than the productivity of their employees!"

Financial statements are after the fact and require a certain level of accounting experience and knowledge of tax codes to fully understand their function. Quite often, business owners expect their accountants to show them how to reduce cost and increase net profits. "They are not trained to do that," Bruce says. "They are trained to deal in historical information, not projections. Although they can certainly help in building net profits, they are by no means the answer to controlling cost." It is the business owner's responsibility to install the proper cost control gauges, and establish a predetermined net profit gauge.

But, when a client is asked about the profit gauges he uses on a daily basis, the standard answer is usually "that's why I have an accountant."

"Generally," said Bruce, "they become interested in profit gauges after they learn how much money they left on the table over the previous six months. Of course, they usually quickly realize that it is not the accountant's job to install cost control gauges."

Here is a simple tool to see how well you and your accountant are controlling net bottom line profits:

  1. Gather your last six financial statements and see if there is a "percentage of total sales" column, or if your numbers are simply shown as dollars.
  2. If there is a percentage of a total sales column, remove (or hide) the dollars column and simply show the percentages. If there is not, simply divide each expense item's dollar amount on your income statement by the total sales. This will give you the "percentage of total sales" for each expense item.
  3. By doing this, you are creating the first instrument to "gauge" the consistency of your operation. For example, when you convert your dollars to percentages each month's total sales always equals 100 percent, so if the rent is $2,000 per month and total sales for that month are $20,000, the rent is 10 percent when shown as a "percentage of gross sales."
  4. After doing that for each expense item, you can compare your expenses as a "percentage of monthly sales" each month.

Bruce states that the purpose behind such an exercise is to compare the proverbial apples to apples. "I do not know how many times over the past 15 years that I have heard from my clients, 'The reason my labor cost goes up is because my sales increased,'" he said. In actuality the cost of labor is reduced as sales increase.

Though Bruce readily admits that his thinking may be a little idealistic, he maintains that the owners who focus on the percentages rather than the dollars can manage their businesses more effectively.

However, he has found over the years that most small business people simply assume that if their sales increase their labor must increase as well. "No way," says Bruce. "The dollars may increase, sure, but the labor, as a percentage of sales, should go down." When both sales and labor increases, this is a clear indication of a lack of productivity, usually resulting from a lack of training. A problem easily fixed. " Productivity problems are the easiest to fix," Bruce confided. "As an independent owner you can have an affect on the people right away -- by changing the way you act you can change their emotional commitment to you and your business."

Of course, obtaining the right employees can be a problem, if you don't work hard at it! "Often, people's productivity is simply a case of a lack of training by the owner and how he wants things done," says Bruce. He relates the following story about an owner that paid dearly for not training his employees correctly.

This particular restaurant was known for their home-made lemonade, made with real lemons. Though there was no need to add additional lemons, the owner wanted each glass of lemonade, over 400 glasses per day, to have a lemon slice as a garnishment. When Bruce performed his business analysis he found that instead of 16 slices per lemon as the owner did, the servers were only slicing 4! Literally quadrupling the lemon cost -- as a garnishment!

Bruce feels strongly that it makes absolutely no sense to increase sales without first figuring out what the optimal profit a business can make on the business.

In addition, too many businesses do not realize the cost involved in increasing sales. "I remember when I finally secured my first professional marketing job with one of McDonald's regional advertising agencies, the total focus was to come up with ways to increase traffic to the local restaurants," said Bruce.

It was at this time that a young marketing representative heard Ray Kroc, founder of McDonald's, say that McDonald's was a penny business, and if you watched the pennies, the net profit would increase. The way he explained it to us was that one percent of $1.) 00 is 1 cent, and if you can save just one cent more from each dollar that you take in, you could earn an additional $10,000 on an average store volume of one million dollars," remembers Bruce. But if you have to spend two cents to increase sales one percent, you're losing money.

Bruce pointed to a promotion early in his career to illustrate his point. "In the year the Pittsburgh Steelers won their second Super Bowl, our agency came up with the concept of giving away a collectors set of McDonald's / Steelers Glasses featuring the Steelers Players. The promotion was a big success and sales were through the roof," he said. "The problem was that the glasses were breaking, and getting in the way of the operation, and the labor to load and unload the glasses got so out of control that the company actually increased sales by 19 percent and decreased profits by 103 percent!"

"We cannot separate ourselves from the profit aspect of this business," Bruce continues. "We must focus on getting as much profit as possible from every dollar taken in by the business."

When contemplating future business strategies involving cost controls, Bruce asks, "I wonder if owners realize that the reason they started their own business in the first place was to be in control of it and not have their businesses controlling them."

Net profit strategies starts with 'pre-determined' net profits based on a lifestyle a person wants. If you feel that spending all of your time in your business is a good lifestyle for you and your family, then Bruce recommends you stay the course. But if your want to increase your net profits and then increase sales -- after you have established an optimal profit -- perhaps you should consider installing cost control gauges in your business.

About The Author

Courtesy ARA Content,; e-mail:

EDITOR'S NOTE: Patrick Bruce, a 27-year food service veteran, has worked with McDonald's, Walt Disney World Company and Red Lobster. He specializes in installing cost control gauges in small to mid-size businesses. For more information, please e-mail him at or call (321) 277-4082.)


Gary D 01.07.2008. 05:22

What finanical metrics of my business should I be most concerned with? I feel that I am suppressing the growth of my company by not paying enough attention to the numbers of the company. I really want to pop the top off and get some great growth this year.

I'm just curious to what very successful people concentrate on when running a business. Ratios? Percentages? etc.

Gary D

Admin 01.07.2008. 05:22

First, make sure you accounting is current and accurate. Having a few years of historical information to analyze and compare to will be helpful. Key ratios and percentages that we focus on are:

1.Profit margin
2.Month-to-month and year over year sales growth
3.Expenses as a percentage of revenue and compared to budget
4.Current ratio
5.Cash conversion ratios - primarily DSO which measure our collections activity
6.Debt-Equity ratio

These are the generic ratios and percentages most businesses should be looking at on a monthly, quarterly, and annual basis. For more information check out:

You should also identify your Key Performance Indicators (KPI?s). These indicators are specific to your business and measure what really matters to the company as a whole and to individual roles. For example, a company may have a specific goal to get 10 new customers per month and a salesperson may have a goal to make 10 sales calls to new customers each week. This will supply you with greater knowledge and control of your business. The down side will be developing the right KPI?s and keeping track of this type of information will require new business processes, systems, and time. So think of this exercise as an important investment in your business. Here?s some more information on KPI?s:

Finally, if you really want to pop the top off you company, make sure you have the right management team in place. You should have a:

1.Business Development and Marketing Specialist ? to get new business leads and deliver the right image to the public
2.Sales Director ? to hire, train and motivate people to turn leads into sales
3.Operations Manger ? to keep things moving smoothly while controlling costs
4.Finance Officer ? to enforce proper and timely accounting, keep your records safe, and develop the right scorecard and metrics
5.Chief Executive ? for vision, inspiration and consistent communication to the staff, customers, vendors, investors, and general public

Ideally these positions should not be held by the same person and each person should be well qualified and educated in their role.

Best of luck to you!


fcchgsk 11.08.2009. 12:39

What are the trends in perceptions of costs and benefits of higher small business ethics in the US today? A small business that goes beyond the expectations of its stakeholders ( clients, vendors, community ) often do so at a financial cost. What are the trends for small business owners currently in the area of business ethics. Supporting community, using higher quality materials, employee programs are some examples where higher standards than minimum legal requirements can play a role. How are these things perceived as increasing or limiting profits compared to the past as you look at the trends of the past 30 years.

One example would be a regulated licensed family child care provider using organic food products at a significantly higher cost as she incorporates her personal value system in the running of the business, while it improves her reputation with stakeholders gives her an 'edge' over other providers, it also impacts her profits as she spends more. Are these typical decisions? Are business owners leaning toward similar decisions, have they been in the past 10 years, and if so has the financial crisis changed that.


Admin 11.08.2009. 12:39

One of my strategic plans in accessing business short & long terms goals is looking at the current economy. You want to maintain a balance based on your financial position. You are the business owner, you know what you can afford in order to stay in business. One of the key to staying in business is controlling cost. If you decide to step out on a limb make sure you can afford to do so . Steps to strategic business planning is continue to look at your business strengths, weaknesses, opportunities & threats.

Some current trends: support your community, implement employee programs and employee training, your business mission should be to strive to support quality service and products. As a business owner, you should join your local Chamber of Commerce. Long term you should look at partnering with other small businesses which have the same interest as you. These things increase the success of your business. And you will see profits increase. Good Luck to you.


qimingzhi.yao 05.11.2006. 12:21

How Information Systems can be used in a businesses to assist in the decision making process? How Information Systems can be used in a businesses,such as airlines, to assist in the decision making process?


Admin 05.11.2006. 12:21

Management Information Systems were initially desgined for decision support and were called decision support systems. For an Airline, you can allow reservations through a computer. With the proper MIS software loaded you can gather information like the demography, geographical, labor class wise etc; the different segment using your services more often and can run your mission to cater to their needs and this will improve your customer satisfaction and customer retention. An accounting MIS package can give you information on your performance at the press of a key and help you take decisions faster on how to improve your performance for growth or improved services. You can control your operations to see where you loose money the same way and cut back on unnecessary expenses. You can manage your inventory, food and beverage, seat allocation, luggage information, landing schdules, take off schedules, either in isolation or integrated to take decisions. You can even creates alerts when criticalities are reached where decisions has to be made manually. Rerouting, transferring passengers etc; can be handled usin these decision support systems cost effectively. Finally you can control the payroll, material purchases, marketing decisions etc; using MIS and decision support softwares tailor made for your business.


Sea 27.07.2013. 19:27

I would like to start an online business on youtube and I do not know how to start? How do I set up a website on youtube where I can have paying subscribers. How do I go about establishing a bank account to collect money from people with credit cards and what about taxes and if the is an advertising fee to pay YouTube. Please give me any details I need to start this business on youtube and any other suggestions you may have to be sucessful. Thank you for your time and energy.


Admin 27.07.2013. 19:27

You can't really set up a website ON youtube. You can set up a channel, but deriving revenue from it is a different story.

Now, you can USE the video streaming ability of youtube and pull your videos dynamically through to your website which has something call "user access control". This is a technical term, but essentially means people wouldn't be able to ACCESS your videos until they became a member e.g. bought a subscription.

There is a key benefit to using youtube as your streaming source. First off it doesn't cost anything. Second they have the BEST servers on the planet and you don't have to worry about slow loading or them being down. You would have dramatic costs for server space and still have to worry about speed with just about every other provider. Even Vimeo.

Let's say you can't set up a separate website right away. You can get revenue from advertisements that run on your videos. In order to actually MAKE any money however you need to be getting a ton of views and have popular content.

If you went the website route, then you will need to set up a bank account for you business. Select a Merchant Services company with a good Payment Gateway API, and make sure your developers of the website have a good understanding about recurring billing (for the subscription) and have done Payment API work in the past.

There is significantly more you need to think about but these are things which you need to think about first and research more.

I hope this is helpful and can give you some things to think about and research in more detail!


Runner 01.12.2010. 17:55

What all things should be considered for starting a dog boarding kennel? I have plenty of land outside any city, with no zoning regulations. Seeking advice on what kind of facility to build to house the dogs, what kind of runs should they require, waterers, insurance, etc? Any advice will be very helpful, thanks


Admin 01.12.2010. 17:55

This is such a massive question. My best advice for you to not build a dog boarding kennel without at least a few months of really hard research. A business plan is a really good idea even if you do not need to go somewhere for funding like a bank, the format of a business plan makes you think of all aspects of your business, so that when it does become a reality, for example:

1. What type of dog boarding service are you offering, i.e. cagefree, or enclosure based or both? doggy daycare too or just dog boarding?

2. Research your Market! Who is your competition in the area? What services do they offer, their strengths and weaknesses, if you can determine approximately how much money they make, that would be good. What do they charge? How many dog owners and dogs are near your planned business, demographics. Find the trends for this market in your area, is it growing? All this will help you determine the size of your kennel, if zoning restrictions do not already dictate this.

3. Marketing and Sales, what are your strategies for market launch, marketing, sales promotion, and distribution. The 4 P's: product, price, place and promotion strategies.

4. Management Team, who do you need to run the kennel, what are your key players strengths, what will be their tasks and responsibilities.

5. Manufacturing / Operations, This will describe the system and activities necessary to prepare and deliver a final service to a customer. How you plan to maintain your edge. This is where you will describe what facilities you require.

6. Implementation Schedule, develop a realistic 5-year plan, concentrating on the major milestones and the most important interdependent events.

7. Opportunities and Risks, you must determine identify a margin of error for departures from your assumptions. Draw up both best-case and worst-case scenarios involving key operational milestones. VERY IMPORTANT to anticipate bumps in the road, so you have a plan to deal with it.

8. Financials, this might be the most important section, because if you don;t make money you will not be around very long. Include a pro-forma income statement, pro-forma balance sheet, pro-forma cash flow analysis, and break-even chart. Cost control measures should also be included.

If you do not have a realistic business plan you are destined to fail. Put in the effort before a shovel goes in the ground or you could very well loose a lot of money. Good Luck!!!!


Rees Tillotson 09.01.2011. 19:15

Tips on how to open up a successful restaurant? I'm highschooler and i want to go into business, I like to cook and I got the idea of opening up a restaurant later in my career. What are a few tips on how to open up a successful restaurant?

Rees Tillotson

Admin 09.01.2011. 19:15

One of the warnings that new restaurant owners hear when they talk about opening their own restaurant is that it will require long hours in order to earn the mount of money you would earn in a 9 to 5 job. Sadly, for many restaurant owners, that is very true. Everything they own is tied up in their restaurant, and it consumes nearly all of their time. You can see this in almost any community with independent restaurants. They are surviving, but are they are not what you would consider restaurant success stories.

Restaurant success can mean many different things, depending on who you talk to, but most owners will agree that there is a vast difference between running a successful restaurant and managing to keep your doors open. Most people with an entrepreneurial spirit do not want to become slaves to their business. Yet many restaurant owners become just that. If the restaurant is open, the owner is there.

So, how does a restaurant become successful. While defining success will be different from owner to owner, there are some keys to restaurant success that most will agree on.


A great meal starts with great food. A meal that is well prepared with quality ingredients is a must on any menu. It would take a true friend to come back to your restaurant time and again if the food was not good.

Along with the quality of the food is that it is consistent. One truth of restaurants is that you will not be able to please everyone with every dish. If the majority of the people that try an item like it, then don't change it. If you change your recipe every time a customer complains you will never have any consistency with your menu. Then when a customer that did like the item returns, they will be unhappy that the recipe changed, and they did not receive what they wanted.


Customers will go where they are treated well. It does not matter how good the food is if your customer service is bad. Your customers are coming to your restaurant for the dining experience, not just for good food. If their experience is not enjoyable, they will start looking for a restaurant that treats them with care and respect.

For your restaurant to be a success, you need to take the time to train your staff in how to treat your customers. Everyone from the greeter to the dishwasher needs to know and understand how to respond to any complaint or suggestion from a customer. While the customer may not always be right, they are the one who pay the bills. Without them, you have no business.


The next thing that will add to, or destroy, the customers experience is the cleanliness of your restaurant operation. For many customers, if there is anything that appears to be dirty or unsanitary, they will automatically assume that the entire operation is unsanitary. They will never know whether you serve the best food in town or not, because they will be so put off by cleanliness issues that they will never eat at your restaurant.

Cleanliness and sanitation does not stop with the physical building. It extends to the hygiene of your staff. Although it can be difficult to have personal cleanliness discussions with your staff, you need to make sure that they come to work clean, and wearing clean uniforms.

Cost Control

While your customers will never see the administrative part of your business, they will see the results. If you fail to keep your costs under control you business will suffer. When costs tart to escalate, there are things that some restaurant owners do that will have serious consequences to your business.

The first step restaurant owners take is to reduce the size of the staff. While this isn't necessarily a bad thing, it can have some negative results. If the staff gets too small to serve the customers adequately, you will have customer service issues. In order to avoid that the owner will need to start doing more work on top of the work they are already doing. That will mean even more hours spent in the restaurant.

The next thing restaurant owners consider to reduce costs is to use lower quality ingredients. Lower quality ingredients will lead to lower quality menu items, which will ultimately result in fewer customers. If the owner tries to lower the food cost without lowering the quality of the food, they will sometimes consider raising the menu prices. When money is already tight, many customers are bargain hunting, and increased menu prices will drive them away.

The easiest way to control your costs is to make sure you have menu items properly costed out before setting your menu. Then you need to monitor your costs to make sure they are in line with your budget.


Gabriel 09.06.2012. 14:40

Why do the big corporations have to ruin small firms? A corporation buys a small succesful firm to get rid of the competition.It esencially eats it alive.

Then they both go broke eventually because they cant pay off all their business associates and the production bills because their firm is too big to manage now.

Things were a lot better when small shops offered quality service and products untill the corporations came and bought all of them or simply outclassed them with their overpriced trash like apple products.

How do you feel about it or think?


Admin 09.06.2012. 14:40

Raw materials purchased in larger quantities would be cheaper than if it was acquired in smaller quantities. More manpower means higher productivity within the same time frame.
In effect, mass production -> increased production at reduced costs per unit overall.
Making more at a lowered cost and selling more at the same or higher value means larger profit margins and higher profitability.
Even though big corporations cost more to operate as a result of their scale, they also enjoy larger turnovers for the same reason.

If the business model is poor, the company, regardless of size, would inevitably fail.
Because the key to a successful business is management, not scale.

Small firms would gain solid financial backing and have more resources available to work with through a takeover by a large corporation.
The capability to upgrade themselves in terms of personnel, expertise and infrastructure can only help accelerate their growth.

The possible downsides for operators of the small firms is that they would likely have to defer creative/executive control to the stakeholders of their parent company in some form or fashion. As a result, innovation and professional integrity could take a back seat to profitability in some cases, but most big corporations would likely retain the existing business model if it proved to be successful and profitable.

When big corporations run into financial situations, they would take steps to cut costs. The most basic step would be to downsize operations, and that often involves the dissolution of non essential departments.

If small subsidiary firms themselves were to face financing issues, it would only be because of their own inept at managing their own operations. If the situation is salvageable, they would likely receive aid from the parent corporation. If not, they would be closed down as a cost cutting measure by the parent company.
In this scenario, only the small firm could possibly ruin itself.

If the small subsidiary firm remains successful in spite of the ailing finances of its parent corporation, it would not face closure because it has value as an asset and would likely be sold off to other corporations to raise capital.
As such, a successful small subsidiary firm would not fail even if their parent companies fail.

Corporations do not simply want to buy out competition. They are selective and only acquire firms in which they see potential. It is as much a business offensive strategy as it is a investment and collaborative venture with the smaller firm. They have no rational reason to want to see the smaller firm go to ruin.

As such, it is possible for small firms to continue to survive and thrive within larger corporations, and for both to prosper together.

The objective of a business is to make money.
If people are willing to pay over the top for a certain product, there is no logical reason why any business owner should not capitalize on it.

Though market dominance would reduce need for corporations to deliver products at competitive prices, the market demand for goods and services is still very much dictated by consumers.
As businesses can only work to cater to or encourage demand, pricing is really a market issue.

By accepting and willingly purchasing overpriced products, consumers effectively drive up prices for those goods and services for themselves.
As such, consumers are really the ones responsible for overpriced goods, and should have only themselves to blame for it.


callieRach 24.06.2009. 09:01

How does a government control inflation? Last night, people were discussing this at a dinner party. The host tried to explain to me that it had something to do with supply and demand. But he didn't exactly get his point across. Could somebody explain it here briefly in layman's terms for me to understand?


Admin 24.06.2009. 09:01

The way governments used to control inflation was by the raising and lowering of central bank interest rates. This had the effect of raising or lowering the relative value of the national currency. It also affected the money available for investment and the running costs of most businesses. So a reduction of interest rates would reduce the value of the currency, make exports cheaper, imports dearer and make businesses more profitable.However if not carried out carefully this could overstimulate demand for products, particularly imports and create inflationary forces ie price hikes and excessive wage settlements (known as stoking a boom usually timed for the run up to an election). The remedy was to raise interest rates to cut demand and sadly put more people on the dole to reduce the wage claims.
Now that the world economy has been well and truly stuffed and the world has a shortage of key resources like oil the above tools are no longer adequate on their own


kekki 25.05.2010. 04:55

what do owners of a business really do? Okay, so say you own a restaurant or a cafe. And over the years you've expanded your business. As a owner what do you really have to do? Can you just hire managers to run the shop while you sit back and do nothing but collect the dough? How does it work being an owner?


Admin 25.05.2010. 04:55

While a business is still small, the owner does almost everything with as little hired help as possible because you want to reduce expenses to maximize profit. Overheard expenses include salary and benefits for employees.

For a small cafe or restaurant, the owner sometimes is the one who goes to the market early in the morning to make sure he/she gets the freshest ingredients at the lowest cost. Some get their family members to serve as waiters and waitresses, etc. Usually the only hired person is the chef. In cases where the owner is the chef, the job gets more difficult as that setup makes managing the business extra hard (imagine not seeing how your sales floor is run while you're busy cooking in the kitchen). The owner might serve as overall manager and cashier instead.

As the company grows and is ready to expand, the owner begins to consider getting more hired help. Family members can get promoted as supervisors or head their own departments/team. Like one in charge of finances, one in charge of purchasing, one in charge or marketing, one in charge of customer service, etc.

If there's a separate branch of the resto/cafe, he/she can get a manager/s but still visit both branches to make sure quality of food and service are at par to his/her set standards. With this kind of monitoring, the business may easily fall apart. Also, monitoring the finances, making sure nobody steals from your cash box and nobody steals from your kitchen as well, or steals time by being non-productive during work hours can be very difficult if the owner is not around or is not able to get a trustworthy manager. Some give managers and chefs some sort of profit sharing to make sure key people stay and act like co-owners - responsible and honest, watching the owner's back, making sure employees do their jobs.

You only reach a point of being able to play golf or go on vacation while your business is running smoothly once you are able to put a good check and balance system in your company, hire the right people, train your people really well and compute well enough an acceptable % of pilferage due to theft, wastage, or other losses.

In reality, the more successful business owners are those that are still involved in one way or the other. Of course they have already delegated most of the tasks involved, empowered key people to make key decisions to operate the business day in and day out, but major decisions are still by the owner.

Owning and running a business may not be as simple as working as an employee. You go home still thinking of your business, your checking all aspects of the company etc whereas an employee can leave problems behind, choose to be mediocre yet receive fixed salary, decide to care less and just work. However, the rewards of having your own business has no limit. There is no cap to how much income you can generate in a month. You have more control and you are able to make more difference in the lives of your employees and customers. Needless to say, maturity and responsibility is basic, wisdom thru experience is relevant, flexibility and people management skills are critical to a successful business.

Of course, those mentioned here are not the only factors considered. There's importance of location, market appropriateness, how your menu is developed, etc. etc.


aamir k 11.12.2008. 09:21

What key factors typically contribute to the success and failure of small business? related to business studies

aamir k

Admin 11.12.2008. 09:21

Here's a few off the top of my head...

Factors contributing to success-
-Sound business idea
-Skills in both making and selling the product/delivering the service and running a business
-Competent staff
-Good cashflow management
-Management of inventory, debtors and creditors
-Able to adapt and change, making use of new technologies
-Good people management and client relationship management
-Good marketing plan

Factors contributing to failures-
-Failure to adapt to changing times
-Lack of business acumen
-Lack of cashflow management
-Lack of competent staff
-Poor controls within the business
-Not collecting payment on time, tying money up in inventory
-Not targeting the right market
-Poor cost control
-Poor people management


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