Man writing the startup info
Man writing the startup info

Man writing the startup infoSome 90% of startups fail; a startling piece of statistics considering there’s no dearth of learning resources out there telling entrepreneurs how to succeed.

Some of the reasons startups are slow to gain traction are straightforward: there is no demand for the product or service; quality is poor; or the business processes need improvement.

Here are a couple of other causes for startup shutdowns entrepreneurs may not have realized.

Cash Flow Issues

Large capital firms can withstand the impacts of delinquent clients but not small businesses who are working on a tighter budget and very limited credit. While startups can avail themselves of small business loans here in Ogden, the infusion of additional capital must be married with sound cash management.

To end that perpetual struggle to make payroll and pay bills, try the following:

  • Refrain from ex-deals or trade. A mutually beneficial exchange can be a good idea but not if cash flow is an issue.
  • Accept credit card payment. This is one way to receive cash fast and cut down on receivables that take forever to collect.
  • Use credit cards.  It’s always a good idea to pay slowly. One way to keep cash in your bank is to use credit cards. That’ll give you 30 more days or an option to pay in monthly installments.

Bad Timing

In his Ted Talk, entrepreneur Bill Gross shared that he looked into so many startup stories to determine why some succeed and others fail. His findings came as a complete surprise. It was timing that mattered the most.

Product idea, team, and execution were found to be very important but the startups that survived their early years in operation had one thing in common: They launched at the right place, at the right time, under the right economic and social conditions.

The Airbnb idea, for example, could have easily failed. Who would want to rent out his home to a stranger? Airbnb succeeded though because it was launched after the recession hit, so homeowners welcomed extra cash in their pockets.

It is important for an entrepreneur to look at the conditions within the business and the environment in which it operates. Is your team ready to outsmart your business challenges like cash flow? Is the market ready for what you have to offer?

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