So, which category are you in…fail or start, or well, just STUCK?
While around 9% of American businesses close each year, only 8% are opened each year.
The leading causes of small business failure:
• Incompetence 46%
• Unbalanced experiences or lack of management skills
• Cash flow problems 82%
So, how do you protect yourself up front or can you?
Yes, you can at least reduce your risk. Regardless of economic conditions, small business owners can take several precautions to prevent the loss of all their time, money and effort in a failed business venture.
First, manage cash flow. You must figure out from the get go how to maintain a balance of getting cash in the door through sales and covering expenses. Constant negative cash flow will CLOSE your doors and create other negatives in your life, like STRESS!
Second, AVOID HIGH DEBT. Loans, credit cards and other forms of debt can be a double-edged sword for a small business. While many companies use some sort of credit to get started, you need to quickly repay it! When a company spends most of its cash flow on repaying debt, it makes it very difficult to expand or keep up with competitors.
Third, try to make accurate projections. The best Business Plans can go BAD, if the projections are inaccurate. This was the case for my handbag design company. My business plan was even reviewed by the Small Business Administration, an Accountant and a leader in the accessory industry. BUT, still the cost of shipping and the cost of making samples exceeded the projections and after four years in business, the doors finally had to be closed. I just could not ever get completely on track, because right out of the gate, the projections and cash flow were WAY OFF!
Due to my past errors in business, I really POUND this in to my clients!
If you want to create a TIDAL WAVE of Profits and a lifestyle you adore you have to go into business with your EYES WIDE OPEN, no rose-colored glasses when it comes to the numbers.
Cheers and Remember –
Your Delicious Life Is NOW, Show UP In FLOW.
Founder, Yellow Fish PR