Alex Shvarts, CEO of FundKite and member of the Forbes Technology Council, had his latest contribution published, a piece titled “Launching A Startup? Seven Strategies For Steady Cash Flow.” The article discusses the financial positions of most entrepreneurs and how this effects the business in the long run, as well as seven strategies for steady cash flow to help keep operations running smoothly.
It starts as follows…
“Launching a startup? You’ll probably hear the following discouraging responses:
• Most businesses fail within a year.
• You’ll fail and lose all your savings.
• It’s too big of a time commitment.
• Have you heard most businesses fail?
“While the statistics surrounding some of these claims are hazy, with smart strategizing, you don’t have to be a statistic at all. While about 82% of businesses fail because of poor cash flow management, there are many ways to prevent this. All it takes is some preplanning.
“An important part of understanding why startups fail due to cash flow problems is looking at who makes up this group of driven entrepreneurs. Most people picture a startup business owner as a fresh-out-of-college, tech-savvy entrepreneur with very few financial obligations. In reality, this category of 18- to 29-year-olds only makes up 4% of business founders. The most common startup age groups are 50- to 59-year-olds (35%) and 40- to 49-year-olds (25%). Why so late? Well for one, it takes experience and knowledge to run and grow a business, and two, while these people may have more financial obligations like a house and a family, they are also likely to have more savings.
“Many businesses (77%) require personal savings to get going. According to research from Kabbage, a third of surveyed businesses were able to get going with under $5,000, while only 58% were able to do so with under $25,000. Even further, 65% of those surveyed said they were not 100% confident they had the right funds to start their company, and 93% of those surveyed mentioned they projected a run rate of less than a year and a half.”
“Not only is a general startup launch more likely to be founded by someone above the age of 40, but it is also more likely to be started by someone who has not been to college at all, according to the Guidant Financial data linked above. Their study shows that only 29% of founders have a bachelor’s degree, whereas only 33% have a high school education or GED. This connects to that older age group of business founders; college debt payments may linger for some entrepreneurs, and many entrepreneurs feel that real experience can teach them more than a classroom.
The article then goes into the seven strategies for steady cash flow. While many of the tips are directed at start ups who experience the most cash flow problems, businesses of all ages can benefit from the advice on maintaining liquid assets and forecasting future cash flow.
You can read the full article on Forbes by clicking this link.
To learn more about cash flow for start ups, read this article.