If you’re running a small business, cash flow is always top-of-mind. The flow of cash into and out of a growing small business can be the difference between success and failure. Research from U.S. Bank found that 82% of small businesses failed due to poor cash flow management or a poor understanding of cash flow.
So what should a small business owner or manager do to stay on top of their cash flow? If the owner or leadership team is not well-versed in reading or interpreting business statements, they will need to take the time to understand these statements to the degree that they can make solid, well-founded decisions for the business.
But, as any small business owner knows, time is in short supply. There is often no time to learn small business finance past the basics while also operating a growing small business. In addition, in many cases, it would be inefficient for the owner to direct their time and attention toward learning these concepts. If the owner or leadership team does have a decent understanding of cash flow, there is little time left to apply that understanding to the business’s operations with other pressing day-to-day operational matters to handle.
This is where a Fractional COO can make all the difference for a growing small business. A Fractional COO can unlock cash flow management expertise without the significant expense of hiring a senior executive at a salary of $200,000 or more. Typically, businesses that are the best fit for working with a Fractional COO have already established revenue streams, and have been operating for a few years.
Past this point, challenges can begin to crop up which creates difficult choices for the owner. Problems with cash flow can start to become apparent at this stage as well. Sometimes these issues are caused by delays in collecting accounts receivable, which is a common issue that Davidson Value Advisors is experienced in solving. Once A/R issues are cleared up, businesses typically see greatly improved cash flow.