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To celebrate Small Business Week, each day on our blog we’ll examine a key challenge small business owners face and provide solutions on how to overcome these challenges.
Growing a business in today's economy is difficult, but not impossible. Small business owners need to pay attention to the costs they can control. Many businesses have a number of annual expenses they pay each year. When those costs are spread out over time, cash flow improves.
According to the 2011 NFIB National Small Business Poll Growth – External Impediments report, 53 percent of small business owners who think lack of finance is an impediment also think that internally generated cash flows will be their most important source of financing over the next five years.
Besides lack of finance, what other impediments are small business owners facing? Some obstacles, such as lack of a strong management team or lack of skilled employees, are essentially within the control of the small business owner. Other factors are completely at the mercy of the overall regulatory environment. Finally, lack of market demand is controlled primarily by the marketplace itself. If the company's product or service does not generate consumer demand, then no degree of overall economic health will generate sales for the business.
Lack of capital is a significant barrier to growth. Today's consumers are still very skittish about the economy, so sales continue to lag and profits are often razor thin. At the same time, financial institutions have not yet returned to the more lax lending practices in play prior to the recent economic downturn. Finding additional capital is its own challenge.
Tips for Improving the Cash Flow of Your Small Business
So let's look at some things a small biz owner can do to help grow their business by improving cash flow. These include...
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