| @entrepreneurinresidence |
You may think that it is obvious to think that you need cash to operate, but it seems that running out of founds before actually open up for business is a common mistake in entrepreneurship. Wexler tells the story of a venture capital that invested $ 100 million (this is arguably too much money) into a firm, that at the end ran out of cash.
💵 Do not forget that cash is king!💵
“Here are the key points:
-Spend less. Be conscious of where every dollar goes. Refuse to spend until you make the money from your business that you will use for your purchases.
-Formulate a business plan that projects when your company will break even -- that is, when it will be taking in as much cash as you are paying out.
-Manage according to that plan and do so every month, tracking the reality of your sales to the expectations of your projections. If there is a negative gap, cut back -- and quickly. If the gap persists, look more closely at your business plan and consider whether or not you really have a business.
-Don't delay seeking help. If you don't have a financial professional on staff, go to your board of advisors. Or call a turnaround specialist to take a quick pulse of your business.
In short, what you need to do is avoid what I call the "spiral": the thinking that next month or next quarter the business will get better, and so you can spend now and hold off paying vendors”
Wexler, Robert. (2002). Some Fundamental Antidotes to Failure; A specialist at rescuing troubled businesses spells out the all-too-often fatal mistakes entrepreneurs make when the going gets rough.(ENTREPRENEUR'S BYLINE)(Column). Business Week Online, Business Week Online, Dec 20, 2002.
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