Some of the main reasons that small businesses are failing include inadequate capital and inability to control costs.
Businesses that are experiencing growth are most prone to these cashflow woes as the business creates a voracious appetite for cash that is being spent on various resources. When cash is restricted, the expansion of the business will be hampered due to the inability to spend funds on infrastructure.
In addition to managing costs of the business, it is vital that the business owner analyses the balance sheet to determine how much of the business’s cash is being held in working capital.
Capital spending is one of the biggest drains on cashflow and can be overcome through different financing arrangements. There will be different advantages for each method, but it is important to establish what will be more beneficial for the business based on its liquidity and cash projections.
If you’re looking at year-end and wondering how you will manage your cash to settle your GST / PAYG / Superannuation obligations in addition to the usual creditors – contact us.