CFO Services | Avoid Running Out of Money
There are many obstacles that entrepreneurs face when they open the doors to their business says CFO services. And any one of those problems, can cause an entrepreneur to fail.
In fact, according to industry Canada. They did a survey and found out that 15% of entrepreneurs failed within the first year of business. While 30% of entrepreneurs in Canada failed by their second year in operation.
And half of all Canadian entrepreneurs that start businesses. Will have failed within five years, due to only three main reasons why. Including running out of money in their business.
In fact, 29% of all entrepreneurs who failed. Said that the reason why they were not successful, was because they ran out of money in their business.
And while there are many different reasons why entrepreneurs may run out of money. There are many things that they can do to avoid this problem. So that they can stay viable in business longer.
One of the first things that their CFO services will recommend to them. Is learn how to understand their finances, and pay their bills on time every month while they are small.
So that when they grow their business, entrepreneurs are going to be able to avoid problems. Because they learned what they needed to do when they were small and manoeuvrable.
So that they know the warning signs to watch out for. And put the same strategies in place when they grow. Often, business owners think the first thing that they have to do is grow as large as they can as fast as they can.
And as long as they are learning how to understand their finances first. When they are small they will not have any problems when they grow larger. Or at least they will have far fewer problems.
And the reason why it is very important to get into the habit of paying their bills on time every month. Is because it can help them understand what is going on in their business financially.
If they are unable to pay all of their bills. They need to realize why. Whether it is their pricing is not where it should be, or they need to find more customers. Or they have unsustainable overhead.
And when business owners can figure this out before they get farther behind. They can fix the problem, so that they can cover all their bills. For becomes a problem that they cannot recover from says CFO services.
However, if business owners do not pay their bills on time. When they get behind, they often will not be able to figure out what their margin is. Which can make it very hard to learn what they need to do to increase their revenue.
But they do not know what their margin is, they do not know what percentage of the job is cost and what percentage is a gross profit. And they will not know how many customers they need to walk through their door.
Helping entrepreneurs understand their finances. Can help ensure that they know what they need to do when they grow their business. To help them avoid running out of money in their business.
It is very important for entrepreneurs to hire the right CFO services. That can help them understand their finances, and run their business successfully.
Often, business owners think sound business strategy. Would be delaying payment, or avoid paying bills. As a way of keeping their cash flow positive in their business. However, this is an extremely dangerous business practice to get into the habit of doing.
The reason why, is because once entrepreneurs are not paying their bills on time. They may not understand if their expenses are unreasonable, or if they should be minimized.
And when an entrepreneurs expenses are unsustainable. Not only will they run out of money the first month. But if they do not minimize their expenses after the first month that they were unable to pay.
Then they will continue to have unsustainable overhead. That will lend them farther and farther in debt each month. That they may not even realize is happening. Because they are not paying their bills.
A good rule of thumb says CFO services. Is for an entrepreneur who is unable to pay all of their bills. Is to minimize expenses, and find more customers. So that they can overcome this problem.
Because if an entrepreneur does not do something to impact the inability to pay their bills. The problem is going to compound every single month, until they are in a lot of financial troubles that they cannot get out of.
And once entrepreneurs have avoided paying certain number of bills for so long. They may have to avoid paying other things later on in their business. Such as avoiding paying taxes to Canada revenue agency.
And specifically payroll remittances when they cannot afford it. The reason why business owners should avoid this. Is because when they owe tax money to the government.
They not only can go directly into an entrepreneurs bank account and take the money directly out of the bank account. They can also freeze the bank account, so that an entrepreneur cannot operate their business anymore.
And when this happens, they will get hit with penalties as well as late fees. That are so steep, and so severe. That business owners may never be able to recover from this says CFO services.
Such as a 20% interest per day that people will get for not submitting payroll remittances on time. That can literally and up with thousands of dollars of interest overnight. That may cause enough damage to business, to force them out of business completely.
Not only will not paying bills on time. Because an entrepreneur to not understand their business finances. And can end up with them in a lot of trouble. But also, it can cost an entrepreneur their reputation as well.
As suppliers will avoid wanting to do work. With people who are known for not paying their bills on time. Therefore, business owners should understand how important it is. To always pay bills on time. So that they can stay in business, and grow.