To plan and develop a successful new business, it is essential to understand why so many startup and young businesses fail, then to make sure that you avoid these issues.
Running out of cash is listed by CBINSIGHTS as the No 1 reason. Recorded for 38% of all business failures. This can be pre-startups, not having enough cash to launch and promote the business, or not having enough cash to support the early life of the business.
But this issue is only one of those that should be addressed in a Business Plan, where a detailed cash flow should be included. A cash flow forecasting and reporting system should be created and in place with details of forecast sales, prices, margins, payment timescales, costs, etc., and updated regularly.
Many prospective and young startup businesses come to organisations like Startup Assist UK advising that they need ‘funding’, but have no idea how much they need. Regardless where they are in the business process, it is essential to know how much is required, and when ?
But the apparent ‘need for funding’ often hides other issues.( All these are live situations which have been identified recently) These may include: insufficient startup funding: a poor marketing cost to sales ratio: cashflow management (allowing customers to pay late and build up too much debt): poor sales returns: not pivoting the business when past and current business strategies fail to work: poor margins: allowing costs to build up before taking necessary actions….
So many issues, and it takes someone with wide business experience to help create a ‘working’ business plan for a business, at whatever stage.
Posted by Startup Assist UK –
Providing 1-2-1 support for UK Startups and SME’s
E: info@startupassist.uk