Are You Running a Business?

As business finance professional I always meet enterprising young men and women, trying their toes in the water of entrepreneurships. It is exciting to see someone taking charge and go with their dream and vision and make their mark in the business world.

But if we go by statistics for someone really surviving in making their business a success, it is hardly encouraging. 95% of businesses fail to survive in the first two years. Many entrepreneurs give up their dream of being successful and join the common work force of 9 to 5 jobs.

I think the most common problem of being successful in surviving a new business venture is the cash flow. Businesses with exciting products and fantastic services fail to survive, because of cash flow.

This problem is the root cause of many new businesses being wiped out in first two years.
People usually start a business, out of a passion or hobby and exhaust all sources of cash to bring it into the market. The demand of cash goes up, when their product is successful in the market. First you have to invest and then you can sell and bring in revenue. How many businesses do you know are out of money and cannot bring in any product to the market for sale, even it’s a successful product. If you have been watching Dragon’s Den, you might have a real life idea.

Interviewing new entrepreneurs, I have often found out, they might have all the skills of running a business, but they do not have the skills to manage financing or cash. The answer to the question “Who is your business advisor or looks after your books?” is very common. It’s usually my dad/mom/brother/sister/wife/friend. Hardly anyone answers that “I have a professional not related with me in any terms” looks after my business finances.

Entrepreneurs might be thinking that by giving the job of financial management to close knit people, they are saving money. Maybe, mom and dad are doing the job for free.

But this free service is ultimately costing them their dream and their business. A professional usually keeps a close eye on your business finances, if they are doing their job properly. Can warn you what has happened and what financial demand might be coming in future. A professional with their existing network of connections, can guide you to others who can help you cut your operating costs, sell more products.

I am making this observation, because today, one of my client who has been working with me since they started their business thanked me for taking care of their financial matters and the business connections I helped them to make and also significantly cutting their Taxes down. They were expecting to pay three times more taxes then they will be actually paying for last year.