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You are here: Home / Archives for small business financial advice

Small Business Financial Advice: 3 Tips for Financial Health

December 12, 2017 By Marco Carbajo

Small Business Financial Advice

Many of my acquaintances have attempted to start their own businesses over the years. At least 70% gave up within 12 months, because they failed to turn a profit. The biggest mistake most of them made was poor cash flow management. small business financial advice

My anecdotal observations are consistent with years of formal research.  A study from U.S. Bank found that 82% of all business failures are caused by inadequate cash flow management. If you want to run a successful company, addressing financial problems is your top priority. Here is some important small business financial advice you need to review.

1) Create 24-month projections for your expenses and use irregular cash inflows to cover them

A few years ago, an entrepreneur friend of mine received a substantial windfall from a new client. She invested that money in a green screen for a side project that she didn’t need. Three months later, she was unable to make a payment for the property she was leasing.

This is a very common mistake with small business owners. They get excited when they first get money, but fail to project their long-term expenses. They blow through their cash reserves and are unable to cover their expenses down the road.

You need to project your long-term expenses and set aside cash reserves to pay them. Don’t get overly confident if you get a large sum of money, because you can’t be sure that you will be getting another large influx of cash anytime soon.
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Filed Under: Business Credit Tagged With: small business advice, small business financial advice

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