Why your business may fail

There are many reasons why your business may fail.

Answers in our survey covered the following;

• Poor cash flow
• Not understanding the cost structure
• Over optimism
• ·Nor focussing on the right issues
• Intentions of senior management misaligned
• Not making tough decisions, early enough
• Too much reliance on one customer
• A cheaper competitor
• Lacking customer service

While poor cash flow is at the top of this list it can be understood to help with almost all of these reasons.

Proper and positive cash flow bides time for the business to adjust from all of these problems and reasons for failure.

It allows the entrepreneur to manage a down turn in trade resulting in losses which need to be financed.

Of course, there is nothing better than self-financing a business through profits. Profits ordinarily generate cash – this hard earned cash must stay within the business

It is too easy to use this cash by  paying shareholders dividends, chasing the next venture or developing new products. Once the entrepreneur is in this position all the previous, same and correct decisions, just at the outset of this entrepreneurial journey, apply yet again.