CEO, and Co-founder Casey Clark sat down with Cultivate's Strategic Financial Director, Tina Moser, to discuss the importance of understanding your business' financials to create sustainable growth.
The key to running a successful small business is a solid financial foundation.
At any stage of your business, whether you're just starting or you're a seasoned entrepreneur, there is a direct correlation between having a firm grasp on your financials and running a profitable business.
However, most entrepreneurs don't go into business because they are passionate about financials. Managing the financials is often the least exciting thing about running your own business. As a result, many owners avoid digging into their numbers and instead focus on other areas of the business. This is a mistake. Even if your business excels in other areas, you must stay focused on managing your company's cash flow to avoid jeopardizing everything you've worked towards.
As an entrepreneur, cash flow is vital to the survival of your business. It's what keeps your financial engine running. Despite this, many business owners don't have a handle on their cash flow.
Regardless of how great your business model is or how profitable you, you can't survive if you can't manage your company's cash flow. According to a study, 82% of businesses that fail cite cash flow issues as the leading cause. So, even if your business is excelling in other areas, you must stay focused on managing your company's cash flow to avoid putting your business in danger.
With the spread of COVID-19 and the constantly changing situation around the world, this is an unprecedented time for everyone. For many, this time is filled with uncertainty.
The unknown of how long this will last, and, for small business owners, how this growing economic crisis will impact their business.
With no end in sight, it can be difficult to know how to make certain decisions for your business. The answer is not that simple, to truly understand what you need, or what can be done in the interim of this crisis, you need a plan. The key is to approach economic risk with logic not emotion, ensuring your business is safe from this crisis.
Growing your own business can be exciting, but it's also extremely challenging.
One of the most challenging and most important aspects of entrepreneurism is learning how to navigate your financials. Immersing yourself in your business's financials is the best way to see how money flows in and out of your business and gives you an accurate snapshot of how well the business performs. Staying on top of your finances means you can avoid unforeseen business debt and have enough money to invest in and grow your business.