Finance: Greatest Business Pitfall
April 3, 2009
Q: What is the greatest pitfall in growing a business?
A: The greatest pitfall is access to cash – more businesses fail for this reason than any other. Cash constraints require business owners to carefully identify/prioritize opportunities; carefully manage investments; increase focus on invoicing and collections; and reduce/manage inventory. In the current “credit crunch” environment, business owners can’t count on getting additional operating capital from traditional sources (e.g., banks, SBA) so they must put more focus on managing operations to create and conserve cash.
For resources on how to overcome the cash crunch, check out these biz tools:
Success Secret: 5 Sources of Quick Cash
60-Second Guide: Managing Cash Flow
Podcast: Surviving the Recession
Download: Cash Flow Template
Sue Hartman, Guest Blogger
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2 Comments Leave a Comment
1.
Greg Magnus | April 3, 2009 at 9:35 AM
So true Sue! Cash is King. As a SCORE counselor, I frequently find entrepreneurs under estimating the amount of cash they’ll need to grow the business. When it is time to get serious about a business idea, one of the first things we do is prepare a financial spreadsheet. It helps us understand the variables that truly affect cash-flow. It also helps us forecast the “maximum amount of cash needed” during growth phases.
Ask your SCORE counselor to help you prepare a financial spreadsheet if you don’t already have one.
2.
Sue Hartman | April 15, 2009 at 6:43 PM
Greg, I couldn’t agree more. SCORE is a great resource for small businesses. Entrepreneurs can download financial projection templates from http://www.score.org and then contact a SCORE mentor for further assistance.
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