The ultimate guide of business strategies and finance management
Going back in the time of our fathers and grandfathers, people were happy being middle class, they were happy earning their daily bread and butter and their ways of earning money were just hard work and perseverance. But the modern generations are exact opposite to such theories. They are not satisfied with less, they dream big and aspire more but the problem lies in their patience level. The young blood wants to achieve more at a less age in less time. They want a secret shortcut to everything, including being ‘rich’.
So this article contains a few tips and tricks besides hard work and perseverance to crack the status of a ‘millionaire’ before you reach your middle age.
Beginning with business strategies, the term is self-explanatory, which includes the course of actions and plans which you would execute to achieve the desired business goal. Before you choose one specific strategy to board your flight to ‘Millionaires’, you need to know about each strategy thoroughly. So theoretically, business strategies are of the following types:
Under this strategy, you build your business as per the existing market structure and already prevailing environment. For example, if you are setting up your business according to prevailing market trends and you are adopting the already existing supply systems, you are adopting a ‘structuralism’ strategy. This is a rigid choice because it narrows down the scope of innovation.
- Cost Leadership:
As the name describes, you have to ‘lead’ in terms of ‘cost’ which means you have to produce the goods or services at a lower cost than all other producers producing similar goods in competition. If you are successful in doing so, you are called the ‘Cost Leader’ of your industry. But do keep the quality benchmarks and brand standards in mind.
What is different is attractive! This is exactly what this strategy asks you to do. Being different may benefit you with a competitive edge but be clear that an excess of differentiation may make your product out of the choice of the customer. So you can differentiate your product in one of the characteristics and its cost while keeping the other features and costs the same as that of the competitors.
So depending on your business idea and field of service, you need to choose your business strategy optimally. Of course you can personalize them while application, but the basic concept remains the same.
Now coming to the finance management part, this is a major area you need to work on for being a millionaire, and trust me guys, it is the most interesting part too. The words ‘finance’ and ‘management’ when combined together mean a very vast task of administering the money and money equivalents so as to maximize benefits. Once you are done with selection of the strategies and other foundation things, the practical part begins, and here are a few tips for the same:
1. STORM YOUR BRAIN FOR INNOVATION:
Alkies are not accepted in competitive markets. You need to be extraordinary in literal sense to create a niche for yourself in the respective industry. Only the unique ones catch the eyes while the alike sheep remain lost in herd.
Innovation and creativity are two different terms. Innovation means building something from the zero. Everything including the idea, mind, money is all unique and all yours. It is something which is not existing in the market before. On the flip side of the coin, Creativity means molding an already existing idea as per your skills. Franchising is one such example, where you take up an already established business but you have to run the store with a creative mind.
So if you are heading towards entrepreneurship, check your aptitude for innovation and creativity and conceive the business idea accordingly.
2. MONEY MANAGEMENT:
Money is something which is hardest to store for most of the time you don’t know why, where and how. But if your target is as massive as being a millionaire by the time your biological clock hits 30, you need to legibly commence working on your money management.
The terms finance management and money management need not be mistaken for the same. Finance management is a broader term whereas money management is just a narrower part of the former. For managing finance efficiently, you need to manage money efficiently.
Managing money basically means creating a balance between shortage and excess of money. You must not be a miser in periods of losses, neither should you be an extravagant in periods of profits. Millionaires require to be balanced and sensible individuals when it comes to spending versus saving.
3. KEEP AN EYE ON INFLOWS AND OUTFLOWS
This point is just a detailed fragment of the previous concept of money management. Keeping an eye on anything leads to its control. If you know precisely what amount is flowing in, then only you can manage what amount you have to save and what amount to spend.
Spending vaguely is definitely not a characteristic of a millionaire. Even if you have it in abundance, spend wisely. Do not swipe your credit cards care freely, it is you only who is going to pay for it ultimately. Being rich does not mean being a lavish spender but being a wise spender.
If you maintain proper records of inflows and outflows regularly, it would be easy for you to match your balances in the end. After all, creating wealth is more difficult than creating money.
4. INVEST AND REINVEST
Managing funds is a thing, but managing ‘idle’ funds is a greater thing. When most of us have money, we don’t know where to put it in. Here the word investment steps into the ground. We have got endless options namely property, gold, stock, mutual funds, bonds, and much more to invest in.
Investment means to put in your funds into something productive with an expectation to get a return on your investment. Such returns may be in the form of interests, dividends, commissions, and whatnot.
Investment is not a mountain, every one of us can invest but choosing the right thing to invest in is definitely a huge mountain. We do have financial consultants and advisories for this purpose so if the amount you are wishing to invest is a handsome one, visit a financial consultant or a professional investment advisor in order to minimize the risk of losing your funds. Obviously you can’t just let your hard-earned money flow in drains in the form of a wrong investment decision.
The term Reinvest is not much different. This is a further action to investment. Once you have invested your funds in the right place and you have begun earning a considerable amount of return on investment, you must invest that return as well in some other place. This is how you win the game of multiplication of your income.
5. SECURE YOUR LOSSES
The one word which can frighten all businessmen is ‘loss’. Whether loss is at a low level or a high level, for once it shakes the business as well as the businessman. So why not prepare and anticipate for losses to reduce the pressure. For this, we need to learn something called loss management.
Mostly, the young generation thinks just five months ahead unlike our father generations who used to think five years ahead. It is at this point where loss management goes wrong. You always need to be like a chess player in the business world, where you have to think ten moves ahead. You need to have eagle eyes and forecast the losses coming ahead, and prepare for them as much as you can.
Developing a foresight for losses won’t make you coward, rather it would make you careful, that is it won’t restrict your feet from stepping ahead, rather, it would guide you in keeping your every step sensibly. We can cover the predictable losses like depreciation, amortization, obsolescence or bad debts by creating provisions for losses out of our profits, while we can secure ourselves from uncertain or abnormal losses by the aid of insurance.
6. KEEP THE PAST RECORDINGS
Dustbin is never the place for your finance recordings, even if they date back to previous accounting periods. One must keep all the records safe for any future reference, audits or corrections. This may also help you in making intra-firm comparisons over the years later.
You can keep a watch on changing trends and improvements within your business firm. This may help you figure out the key areas where you need to focus more for growth.
7. BE CONFIDENT
Being confident solves half of the problems. If you believe in yourself, there is nothing that can stop you. Be confident with your ideas and your abilities. You can always welcome good suggestions and assistance but be your own leader and analyst.
Don’t get influenced by others easily and build up your own benchmarks. We can’t be successful by copying other success stories, it has to come from within.
8. PATIENCE AND DETERMINATION
It requires loads of patience to be a successful millionaire. Being a businessman is a very long term project. You can’t give up in the middle if you can’t spot any near profits. A business is like a seed sown deep in the earth, you need to water and nourish it with endless water and sunlight and it would take years to become a tree. So it is a considerably long period for which you have to invest in your business before it actually grows into a tree and gives you something in return of your nourishment.
You just have to stay determined and do not get distracted by other shortcuts of creating money. Shortcuts take short time to create money, but their results are also short lived. So have patience and nourish your business tree to enjoy long term benefits. Once it starts bearing flowers and fruits, you are nowhere far from being in the cool shade of a millionaire.
So there is no set pattern to be followed to reach that highly placed aim, different things work for different minds but these tips can help you ease out your journey to some extent.
We wish you a million of success!
Rushin is a finance geek and a small business owner. He started FranchiseKaro.in where he blogs about starting and running franchise businesses. It’s an initiative to help people with starting and running businesses.