It’s a new day and another week in small business-ville! Thank you for tuning in and welcome to another read on The Keys. It’s your favorite Money Motivator – Growth Instigator, Erica Fields bringing you the keys to your financial house!!
In speaking to Jowanna Parris-Daley of Daley Word, we shared a common concern for the small businesses we support: poor cash flow management. This topic is always on the top of the list for businesses, no matter how long they’ve been in operation. It’s especially crucial for new business owners to grasp the cause and effect of certain habits. Below are two areas where most new businesses fail resulting in a weak cash flow.
Before you open your doors, you should have a plan in place. Do you know your immediate market area? How much demand is there for your product or service and are others providing the same? Will you have an advantage going in? These questions are typical during the planning stages of business. And these same questions are often ignored. And doing so could result in signing a two-year lease within a quarter mile of your best competitor leaving you stuck with having to fight for customers and territory.
Whether you’re just starting out or been in business for a few years, most entities struggle with managing expenditures. Knee-jerk reactions, bells, and whistles are all tools of entrapment for your hard-earned revenues. You must access the level of need the purchase will fulfill and if that need can be satisfied by a free or less expensive option. It may require that you spend more time or continue to complete a process manually, but the long-term savings could equal to a month’s pay during a slow month.
Get with your financial specialist to explore all areas of your business to help develop an action plan. Good habits are required to sustain a new business during the first five years. Statistics show most won’t make it due to poor planning and poor spending habits. It’s very easy to spend today and ignore the needs of tomorrow. But remember, as a business owner, you have numerous financial responsibilities that cannot be left to chance.