Learn The Critical Role That Lack of Cash Flow Plays
In Killing New Businesses.
Observe the business cash flow pattern that kills most new businesses before they have a chance to start: Startup Money IN + Money OUT + Money OUT = Dying Business Due To Insufficient Cash Flow.
When setting up your business for growth, ensure that you are not bitten by the new-business-killer: lack of sufficient cash flow.
This phenomena can kill your business before it has a chance to get off the ground good.
Here's the scenario:
- Kathleen decides to open her new retail business.
- She has enough cash reserve to keep her business open for at least three months, which is more than enough in Kathleen's eyes.
But here's the problem:
Small business accounting experts recommend that Kathleen have at least six months worth of cash reserves for her business as well as six months cash reserve that is set aside for her own personal living.
- This cash reserve is needed to protect Kathleen in the unlikely event that something semi-major happens - like the toilet blows up during her second week of business or something.
However, Kathleen feels protected because she feels that she has made all the sufficient checks.
- The building has passed inspection and everything seems to be in working order.
- This pervading feeling that everything-is-in-working-order lures Kathleen into thinking that she can get by with just three months of cash reserve on hand.
- She walks into her startup feeling confidently assured that her three-month cash cushion will take her through her startup phase.
But unbeknownst to her...her estimates did not include the three-month long rainy season that made it difficult for customers to visit her store.
...And now the rent is passed due and she doesn't know how she is going to pay her suppliers.
- Oh, if she had just listened to the advice of her small business accountant, she wouldn't be up to her elbows in debt.
- Nor would she have to face the collapse of her new business and close her store due to a slow season that is caused by events she cannot control.
Learn from Kathleen's mistakes.
When evaluating your start-up budget, ensure that you have enough business cash flow and cash reserve to keep your business afloat during the rocky first six months to a year.
- It is suggested that it takes a new business at least three years to stabilize and weather the startup storm.
Don't get swayed by the notion that it won't happen to you.
Lack of sufficient cash flow and cash reserves causes millions of new businesses to close each year.
Protect yourself by seeking and following the professional advice of an accountancy service that specializes in helping small businesses weather the small business start-up storms.
Wishing you a successful startup,
Signed: Latarsha Lytle, MBA, your business strategy advisor and motivational coach
Having Sufficient Business Cash Flow Gives Your Business The Edge It Needs To Survive. Read More Business Survival Tips Below.
Financing Your Startup Doesn't Have to Be A Drudge. Adopting A Debt Management Perspective To Find Ways to Finance Your New Business.
Securing A Biz Loan. Getting a Biz Loan Requires Taking a Strategic Stance and Building a Business Banking Relationship the Will Work in Your Favor.
