Money Matters for Small Businesses: Understanding Cash Flow
by Carrie Williams, CPA, Financial Coach, and Owner of Running Valley Financial
Your lifelong dream of owning a small business has come true! You have established your company, you have a product or service that you are passionate about, you start advertising, and you have interested clients and customers! Congratulations! You might be thinking that it’s smooth sailing from here until retirement, right? Not quite.
According to the Bureau of Labor Statistics, 22% of all small businesses fail in their first year, 30% won’t make it past their second year, 50% will suffer failure within five years, and more than 70% won’t make it past 10 years. Ouch.
There are many reasons for these grim stats, but with some education and careful planning, here’s one statistic you can avoid being a part of: nearly 30% of small businesses fail because they run out of cash.
There are many facets to owning a successful business besides having a great product or service. You also need to understand your business’s cash flow. You want to ensure that your business will be around for the long haul, and if you employ others, that you are able to provide for their livelihoods in a consistent manner as well. You don’t have to be an Accountant or a CPA, but it’s your responsibility to understand the basics of your numbers, and to know when to ask for help from an expert.
Here are 5 actionable tips you can implement to have a financially responsible business.
As a business owner, you can be empowered when it comes to understanding your business finances. Be sure to prioritize some of your time toward reviewing your numbers at least weekly and utilize the resources of professionals to help you create additional strategies. Following these tips can minimize the possibility of your business becoming a negative statistic and can instead maximize your cash flow for financial success.
*About Carrie Williams, CPA and Financial Coach Carrie Williams started her small business, Running Valley Financial Associates, in the middle of the pandemic because she saw a need for common-sense financial coaching. She uses her passion for helping people and her skills of encouragement and money management to empower everyday people and small business owners to step into their money power with knowledge and confidence. She resides in the Tampa area with her husband and very active children and spends her free time joyfully attending all of their sporting events and cheering them on.