Every day
businesses and business owners are susceptible to many attacks and challenges
that could devastate their hard work and livelihood. Are you one of those businesses or owners? A
survey by Forbes Magazine showed some interesting facts: Over 500,000 new businesses are started each
month. Almost 40% of these small businesses never make it to their second
anniversary. Yet another 55% never make it past 5 years. Only about 1/3rd
make it to 10 years. Why?
Three main killers of a businesses
1. Lack of cash flow
2. Poor leadership and customer
service
3. Lack of a strategic plan
Over the
next few months I will address each of these three major challenges that
business leaders fail to protect themselves from and will kill a business.
Lack of Cash flow.
Starting
a new venture takes a bunch of things, one of which is a basic knowledge of
business and how to sell your product or service. Over the past 11 years I have been working
with clients to create sustainable and profitable businesses I have found that
this is the thing that will kill a business.
So you are probably asking yourself, how this relates to the 3 killers
of a business.
Bottom
line, no sales, no cash flow, no cash flow, no business. Simple but true. So often a client has made the decision to
step out, start a business based on their technical expertise and has yet to
learn how to sell what they do. They also start without enough capital in reserve. Result.
FAIL! It has been said and I
believe “that nothing happens until a
sale is made”. If no one is selling, I can guarantee tis, no
one is buying.
Ok how
does lack of cash flow kill a business?
I have learned that cash flow is king and with a consistent flow of cash
into a business there is hope. Now if it is a negative cash flow, there is a
challenge for sure. When I opened my first restaurant in 1981 we did everything
on a shoestring and were literally taking from Peter to pay Paul. What does
that mean? What it means is we used cash flow to pay immediate critical bills
(electric and staff) while others (beer
and food vendors) we used float time to let our cash reserves replenish to take
care of other these less critical expenses. My partner and I became known as
the kings of the float.
We would
pack the bar out on Thursday Friday and Saturday with happy hour and late night
biz. What that means is we would always
write checks late on Friday to the beer and food vendors knowing they would
wait until Monday to deposit, giving us three days to use the cash flow and float
to keep us going. Now this just was used
as a strategy as we started, once we established the business and we began to
see positive cash flow, things smoothed out.
Still I learned that cash flow is king.
So to
protect your business, focus first on your cash flow and protect it like a
chastity belt protects a virgin. But that's something for another time. Until next month protect your business and
remember cash flow is king.
Coach Rick Kolster, CBC is a certified business/life coach, the author
of Selling for Geniuses and Roll Up Your Sleeves and Get To Work as well as a
motivational speaker on personal growth. He can be contacted at 817-748-7425 or
Rick@CoachRickKolster.com www.CoachRickKolster.com
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