I don’t know about you, but I’ve grown weary of the small business statistics, reported by the Small Business Administration, that only half of new businesses survive for the first five years and only one-third of new businesses are able to survive for 10 years.
Knowing these statistics, has me wanting to save the world. One small business at a time. How will I accomplish this you may ask? Well, it starts small business owners recognizing and accepting the accountability to learn from prior business failures. Knowing what steps one would take to solve problems when they occur, because they will occur, can go a long way toward saving your company. While any unforeseen situation can cause for a nightmare, one important factor to question all business owners should ask themselves is, do I have a solid financial footing in place? Regardless of how the business fares out, it should not make your personal financial matters worse.
Negative cash flow can push successful businesses into tailspins, with profit driven efforts rapidly changing to panic and insecurity. If done properly, business owners should be able to detect problems brewing months away and develop uniquely designed strategic solutions. Unfortunately, many business owners don’t have solid processes in place to predict, revenue, expenses, and cash flows.
Let’s make note of 4 key ways to examine and maintain a positive cash flow:
- Reduce and monitor expenses: Successful business owners discover the importance of a budget in the workplace and then watch their budgets like hawks!
- Establish credit lines early: While the initial focus when building a business is your personal credit rating. Business credit does matter as a business owners. Don’t underestimate cash needs by assuming future profits will materialize.
- Develop budgets: Build a budget and make it a standard business practice to maintain. Think realistic when developing and don’t underestimate expenses.
- SAVE: Business owners are not considering this as a part of their business model. A cash cushion is key to surviving the surprises self-employment can bring.
As with any business, planning is essential. It’s no secret that small business owners have a lot to do. The financial implications of business ownership are extensive, yet critical to a company’s success. However, starting your own business could be the ticket to the personal autonomy and financial independence you’ve always wanted.
As an entrepreneur, your vision will dictate the success level of your outcome.