One of the biggest weaknesses facing small business startups in an unsteady economy is misguided budgeting. Managing cash flow during the first months and even into the first few years of a company’s life means dealing with quickly shifting payrolls and cycling through suppliers to find the right fit among a potentially endless list of other financial hiccups.
Without a smart budget flexible enough to absorb the bumps, it’s easy to drown your good idea in over enthusiasm and carelessness.
According to research conducted by the University of Tennessee, 46% of failed startups succumbed to “incompetence” in categories such as: “No knowledge of pricing,” Lacking of planning,” No knowledge of financing,” and “no experience in record-keeping.”
When used effectively, a business budget is a powerful financial tool available to the levelheaded small business owner. Having the fiscal foresight to manage both short and long term obstacles is one of the keys to keeping control over where your business is headed rather than having to steer it where your cash flow demands it goes. (more…)