Starting a business is exciting, but it comes with challenges — and one of the biggest is cash management. A contact of mine recently asked me what the most significant issue would be if he started a business. The answer is simple: knowing your cash flow and understanding how long your cash will last.
One key question every entrepreneur should ask: What is your shelf life of cash? In other words, how long can your business operate if revenues slow or expenses unexpectedly rise? Many self-employed professionals and startups underestimate this critical factor. During economic downturns, credit often becomes more difficult — or even impossible — to obtain. Planning ahead is essential to avoid running out of cash when you need it most.
Cash management isn’t just about your own business. If your clients or customers are small businesses themselves, they may face credit challenges that affect their ability to pay you on time — or at all. Understanding both your cash needs and those of the businesses you work with can help prevent surprises and ensure smoother operations.
Before launching your business, carefully evaluate your cash requirements and plan for contingencies. Many great ideas fail simply because there wasn’t enough cash to sustain operations. By preparing ahead, you can avoid becoming a statistic and give your business the best chance for long-term success.
If your business is struggling with cash flow or facing uncertainty, reach out to learn how I can help guide you through these challenges.
