Launching a small business and making it successful is hard. I know this as a small business owner myself, and I’ve helped our clients succeed. There are lot of things that make you stumble after you’ve launched your business. But one problem that a lot of business owners face is cash flow. Studies have shown that the vast majority of companies that fail do so because of cash flow mistakes. The small business website AllBusiness lays out some of the cash flow mistakes business owners make. Here we’re sharing the three we think can be the biggest pitfalls:
Failure to track your accounts
If you are serious about your business, ideally at least, you need to keep track of every dollar you earn and spend. Easier said than done, I know, but tiny expenses here and there often add up, especially when we don’t pay attention to them. Not keeping track of your accounts in situations like this almost guarantees cash flow disasters later down the line.
Not planning for reliable revenues
As a business owner, you’ve done your part: you’ve identified your target audience and built a great product/service to address their needs. Now, all there is to do is roll out your product and wait for the money to come in, right? Wrong.
Building a business is just one part of the equation; the other is ensuring that it runs profitably. One of the biggest challenges startups and small businesses struggle with is building reliable revenue streams. That’s partly because emerging companies don’t necessarily operate on strict business terms. They often tolerate things like payment delays and tentative agreements, believing they need to make up for their lack of experience with generosity and patience.
Such an approach, though convenient, doesn’t help your cash flow situation. The final goal any business aspires toward is having a steady and reliable income stream. And while it is fine to take your time trying to get there, you must also ensure you are doing so as fast as possible.
Not planning for unexpected expenses
No matter how impeccable your business model is and how flawless your execution might be, there will always be unexpected downturns that might catch you off-guard. Preparing for these is really off the table because there is no way to see such expenses coming (that’s the whole point of calling them “unexpected,” right?)
However, a business can still be prepared for these by having a flexible business strategy and banking up cash savings. If setting up an emergency fund is difficult, try having a separate bank account altogether for the purpose. The best approach is to be prepared for these occasional surprises by having a cash cushion to rely upon.
Avoiding cash flow problems will help ensure your company’s success. Another way to ensure your success is to let us help. Our bookkeepers, administrative professionals and HR experts can give you more time to grow your business. Contact us and we’ll set up a plan for you.