According to statistics, only 40 percent of small and startup businesses are profitable. It can be tough out in the Business world. With digitalization deeply integrating in our society, many businesses offer overlapping products and services. Competition can come from anyone and anywhere.

Around 9 percent of businesses close each year and several factors play a key role in their demise. The main causes of business failure are incompetence, unfit leadership, mismanagement and unprofitable commodity. To succeed in the midst of a dog-eat-dog world, an entrepreneur needs more than just credentials from university, savings from their parents or the desire to change the world for the better. Here are some tips to increase your chance of establishing a successful business.

Choose the right business for you

Attaining business success requires a lot of hard work and sacrifice from you. It is important that the business you are pursuing is aligned with your whole being. You need to be aware that a business will demand a lot from you and can sometimes trigger a situation that will ask you to give up something else. Choosing the right business for you will ensure that you are willing to give your best effort if not all. It can be something derived from your passion. A solution you think our society desperately needs. Or a product that is a direct result of your specialization.

Master your cash flow

Statistics suggest that over 82 percent of businesses fail because they have mismanaged Cash Flow. Cash flow is the cycle of money coming in and out of your business. Money coming in can be your customer purchases and cash coming out can be any form of payables like office rent, taxes and other expenses. To run out of money means the game is over. In order to prevent this from happening you need to strive to always have positive cash flow; meaning more money is coming in than gushing out. Make sure you have adequate cash reserves to cover any expenses your business operation may accumulate.

Watch out for Your Fixed Operating Expenses

We talked about the importance of cash flow, so now let’s talk about how you can keep huge payables at bay. When you are just starting you need to make measures that will keep your operating expenses at a minimum. No need for huge office space or high-end office machines just yet, instead look for alternatives.

If you want a professional setting and chic business address without paying astronomical money then sign up for co-working spaces. Shared space companies can provide you with business standard service of internet, computer and office. They also let you use their office address; most of them are located in a trendy central business district.

If you need to hire people for your business to run but don’t want to cover the HR requirement or payroll system then go look for freelancers or check out what outsourcing companies can offer you.

If you need expensive items like office machines, printing machines or vehicles for shipping needs then you can rely on rental companies if you don’t need the vehicles long term. They can provide you with quality items in an economical price.

Customer retention is the key

Focus on customer acquisition and retention. They are the very reason your business keeps on going on. You need to identify ways to reach and acquire customers. Once you have customers, your next task would be to make them keep coming back. To have a good amount of repeat loyal customers are a great way to sustain your profit. They also work as a great marketing program since they can share positive experience with your product or service through word of mouth. Without a need for a robust marketing means lowered business cost.