Yes, that shocking news is true, most businesses fail within their first ten years of operation, and the rates are even higher within the first five. In comparison, most business owners are more than happy to take calculated risks. And they work hard to build up their business. Having a small business is a large part of the American Dream.
But when only four out of every one hundred businesses survive more than ten years, it can be dream-crushing. What’s really happening to shut down all of these businesses that aren’t making?
If your business is less than ten years old, read on to learn some things you need to avoid if you want to make it past that iconic mark.
Related: About PGI
Profit is only a theory.
The bottom line is just that, the bottom line. If your business can’t pay its bills, it’s going to fail. Because most entrepreneurs are not financially literate, it can quickly go wrong. Many small business owners go into business not for their love of crushing numbers but for their goal to make the world better with their products.
Yet they hire accountants and look at profits and expect to have the same power as to how much cash in hand they have. However, if the cash isn’t there and they can’t pay their bills, their doors close. Vendors and creditors don’t care about what looks good on paper. They need cash in their hand, and if you don’t have any, your business will struggle.
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You Are Financing Your Clients or Vendors
Massive companies tend to pay off invoices slower by utilizing their size and position in the industry. However, small and even medium-sized businesses or entrepreneurs can’t compete on the same level and sometimes end up financing clients who are ten times their size.
This additional burden can only worsen problems because you are already starting at a negative when you attempt to attract necessary vendors. Those vendors end up paying fast. Your business then relies upon the ability to pay them quickly.
The real problem comes when you try to be corporate friends with your vendors while waiting on slow-paying clients. This can put a massive strain on your limited financial resources as a small business.
Personal coaching might be the answer you are looking for. Proctor Gallagher Consultants offer personal coaching to help you reach your goals.
Controlling Your Cash Can Also Help Increase Your Profits!
If you aren’t managing your cash correctly, then you are losing it. By having a tight grasp on your cash, you can actually improve profits. The higher visibility of expenses can alleviate mismanaged money.
Even just cutting ten percent of your expenses, you can boost your profits by as much a fifty percent. Who couldn’t use an extra fifty percent of profit? Many non-critical expenses can be cut in order to grow your business.
Do you want to cut your expenses within the next 90 days? Start signing every check. While having a financial support team is a valuable asset, going back to basics can help refine expenses. This process doesn’t have to be an all-the-time thing. Just as general upkeep to ensure you are mindful about your business spending habits.
Taking Control of Your Business’s Financial Future
While this might seem overwhelming, there are ways to keep your business running for a long time by taking control of your long-term financial health. Many CEOs run into problems because they aren’t clear on what they are reading when their financial team brings in their reports.
Having a better understanding of what these reports say can help you better manage your business’s finances.
Poor Management Team
Having leaders that don’t know how to lead can be a huge problem within your business. While having a dream, goal, or idea about what you are doing with your business, others might not follow your standards. Having the proper support and coaching can help your team be supportive and on the same page.
Having an awesome management team can also streamline the employee onboarding process, resulting in better customer interactions. The best way to keep money flowing into your business is through happy customers.
Does your management team need coaching? Proctor Gallagher Consultants can help transform your business from the inside out.
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