Why are Entreprenuers so hopeless with cash?18th October 2010
An interesting item in this weekends FT from Mike Southon, author of the Beermat Entrepreneur and one of the best business speakers around!
In Mike's words "The main reason for a company failure is their running out of cash, and every financial expert I have met bemoans the entrepreneurs’ reluctance to address the problem earlier in the process, as simple steps could have been taken to avoid later catastrophe" ... this is so true!
Time and time again we get involved with businesses that have a sound underlying proposition, but are facing crisis because they have not managed their cash properly. What is more, it is not just something you do when it is a problem, every business no matter at what stage it is, how big or small, how strong or weak, should always manage it's cash as if it will all run out tomorrow.
Mike goes on to say about why business owners are so bad at cash management ... "This is a combination of the entrepreneurs' over-confidence and their blind faith that something will turn up, like Mr Micawber in David Copperfield. Just as many successful entrepreneurs are dyslexics, many also have a similar blind spot with regard to money". Yet isn't the main reason why everyone goes into business to make the stuff?
The solution is to have someone constantly focused on it, and accept that the business leader or Entrepreneur is probably never really going to get their head round it. The problem is the best person to do this is often not the "bookkeeper" or an administrator in their spare time. It needs someone who will really take responsibility for it and manage it, not just let it happen!
If you are concerned about the cash in your business (and you should be!), then get in touch and we can send you our Top Tips sheet!