Interesting note to all- it is not for lack of money that most businesses fail- According to a survey of 1900 professionals in the latest Business Week, here are the top 6:
1. Too much debt
2. Inadequate leadership
3. Poor Planning
4. Failure to change
5. Inexperienced management


Not enough revenue (8%) was the last reason reported for failure. So, use others as a deep well of knowledge. Post questions, and utilize the vast collective knowledge of your brethren. We are all experts in our area of the learning curve- Yours can be shorter (and less painful).

janetc,

I'm not trying to go against the idea that non-financial factors certainly do play a huge role in business failure. However, too much debt is the result of not enough money.

Out of curiosity, were the stats cited from mid to large size businesses, or small businesses? By a small business, I mean an entreprenurial effort that is not backed by a corporate parent or "a big dog" itself.

Great info on your behalf.

Debt is caused by lack of money in the first place, other wise we could pay cash for everything. I am not sure of any business that is not in some kind of debt. Debt is part of being in business. When you create the debt if poorly manage it, usually it will have a negative impact. Proper management is the key. There a lot more factors involved as well. I know you can't single out just one problem, all the problems must be managed right.

From time to time you just have to look at the areas that are bad, and if you don't know how to fix it, trust me set your ego aside and pay a professional to get back on the right track. BUT do your homework if you choose to go this way.

I know someone that does this for a living, and I have seen the transformations of these businesses after he leaves.

My 2 Cents..

No I'm gonna dissagree with the Poll or offer an alternative to "Debt"

Cash Flow

The major reason most new companies fail is "failure to collect payments" this comes about due to companies extending credit to firms whom are bigger than they are who deman credit terms, and being small fry, the new company is in no position to say much but "okay" and when the bills start to pile up they have no cash flow, the big companies know that if they hold off paying you then you're dead meat and so they win and you die....it might not be fair but it sure ruins a lot of companies. same effect can be felt if a person who owes you money goes under for similar reasons, i.e. unable to collect money, you end up with no money when you thought it was "in the bank". Business is not fair when you're small and new.

It all comes down to money, but "cash flow" is the killer.

Cheers

Chris

You are correct Chris, cash flow is the number one problem. A profitable operation can go out of business for lack of cash flow (positive cash flow - money in).

What the previous posts in this thread fail to point out is that debt is aquired due to lack of cash flow, whether the revenue has been earned or not.

Cash flow is king!

Thanks for adding to this topic.

Mgriffen,
I know all to well that a negative cash flow can hurt, goin though it right now. the craziest part of all, is that, we have the largest income from sales and the largest inventory that we have ever had. But right now we are "strapped" for cash due to "tooling" costs on new products being developed. We already have enough orders for the new products that will put us into the green as soon as manufacturing is finished, but do you have any suggestions on what to do, to hold us over until the process is complete?

We have looked into "factoring", great idea but by the time we can finish the process, the new products will be done.