Cash is Everything in Business

Cash is everything in business. It is its lifeblood. It matters not if a company is generating profits. It can still go pop. But having cash, on the other hand, keeps businesses growing and thriving.

I received bad news today that a client is entering into liquidation. This is bad news for my firm as they owed us money (which we will never now see) but I feel for the founder and the team. They were working on an exciting concept that looked like it could have made a mark in the e-commerce space BUT

.....they ran out of cash.

Because they were pre-revenue, their cash flow was reliant on business angel funding and tax incentives (the latter with which I helped). Once they'd burned through the first chunk of cash, unfortunately, the funders were unwilling to follow on with more cash funding. I am not close enough to the detail to understand the whys-or-wherefores of why more funding was not forthcoming, but it wasn't. So the company's gone pop.

We all understand the importance of cashflow but it hits you harder when you see and feel the impact of when it bites and kills a promising company.

I wish I was working more closely with the company to see if there were ways in which we could have helped earlier to avert the cash flow disaster that was coming, but we weren't. So it is all a case of "ifs and "buts".

Profitable established companies are not immune from this cash flow problem either. It is the biggest killer of companies. It can grow as a problem quietly in the background (like a cancer) and bite much farther down the line when the business owners least expect it. Wider commercial and economic factors can also come to bear, for example, reducing or worse ending lines of credit unexpectedly.

I always say that the best time to approach a bank or lender for cash is when you don't need it. The worse time is when you do...because it's likely too late.

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Posted from my blog with SteemPress : https://businessn2k.com/cash-is-everything-in-business/

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