You might have heard it said that eighty percent of small businesses fail in the first five years.
The interesting thing though is to examine the idea of what failing is. The difference between someone who fails and someone who succeeds is that the person who failed stopped and gave up and the other one didn’t.
You’d be amazed when you look at the number of people who failed in business and looked and found that they had profitable businesses that were on the way to succeed. In nearly all cases you’ll find that they ran out of money and gave up before the businesses became a success.
So there are two aspects to the financial health of your business:
- Is it profitable?
- Does it have enough cash flow?
There’s no point making a million dollar profit at the end of the year if it took half a million in cash to stay alive for the first six months and you don’t have the money to start with.
The best way to handle this is to look at a businesses’ cash flow and find the shortages in what they are doing so these can be handled upfront. For example, if the business above knew that it would need half a million in the next six months to support the business deal that would give them a million dollar profit in twelve months then they can look at whether they can afford the half million dollars or should they skip the deal altogether.
Having the information you need to make this decision is an important part of running your business.
At Dollars with Sense we work with experts that can help you understand the information you need as well as help you bring it together. What’s more, if you need to access some finance to handle the cash flow we can help you with that too.
Just email firstname.lastname@example.org now to find out more. Don’t be part of the eighty percent of businesses that fail when they don’t need to.