We talk about it in our Definitive Guide To Cash Flow Advisory. The basic concept of why cash flow is important is simple: if a business can generate consistent, positive cash flow, it’s going to be a great success... if it can't, you've got trouble.
But while everyone knows that you need to collect more than you spend for long-term sustainability, it is much easier said than done. Small business owners are simply too busy running their business. They have to continually deal with customers, suppliers and employees, and their finances almost always take a back seat.
And this is exactly why cash flow advisory is so important: even though entrepreneurs know they should collect more than they spend, they don’t have those optics for a number of reasons. They are quite literally, flying blind.
The Stats: All Small Businesses Need Cash Flow Advice
The proof is in the numbers. When people ask why do businesses fail? Or, how many businesses fail? Or even, how many profitable businesses fail? The answers always lead to the same grim truth. Most small businesses fail. And most fail because of cash flow issues.
Some of the quick stats:
- 82% of business failures can be tied back to cash flow issues or financial mismanagement
- When looking at ten year time horizons, 57% or more of all businesses fail.
- Some practitioners that have researched this issue estimate nearly 60% of businesses that fail are profitable.
- 62% of all small businesses have experienced at least one cash flow issue in their business history. More than 52% of these businesses experienced more than one cash flow issue.
All of these figures make it pretty clear that when it comes to cash flow forecasting and cash management, small business owners need help.
If you are an accountant, bookkeeper or business consultant, and want a resource on how to help them, take a look at this related article: Why Do Businesses Fail (And How Can Professionals Help)?
The Stats: All Small Businesses Want Cash Flow Advice
But the numbers don't just stop there. Small business owners don't just need help forecasting and managing their cash flow, they want it.
According to an Intuit study, 80% of small business owners with cash flow issues were stressed about it. And interestingly enough, that same study found that 69% of all business owners have been kept up at night worrying about cash flow, whether they had an issue or not.
These figures clearly show that most entrepreneurs and small business owners are continually thinking about cash flow issues. They are literally waiting for a professional to lend a helping hand.
The Truth: Cash Flow Advisory Isn't Just Important, It's Essential
If we combine all of the quick figures we've listed so far, we can see that:
Most businesses fail
Most businesses that fail do so due to lack of cash or other cash flow issues
Most businesses that failed were profitable
Most companies experience at least one cash flow issue in their life
Most business owners are stressed about cash flow to the point where it keeps them up at night
These all highlight just how important cash flow advisory is. Small business owners both need, and want, cash flow forecasting and cash management services. In fact, given the statistics, one could go so far as to say that cash flow advisory isn't just important to all small businesses, it is essential to all small businesses.
The Best Part: Cash Flow Advisors Can Fill More Than Just A Demand GapOffering cash flow advisory services meets a significant need for small business owners. It fills the time and expertise deficiencies that your clients have, provides a future looking guidance and path, and assures a greater chance of success.
But we truly believe that the emotional side of the equation is often undervalued. And this is the most exciting part of cash flow advisory in our view.
By providing clarity on the future and eliminating the routine of “flying blind,” professionals can put an end to sleepless nights and high levels of anxiety that their small business clients have.
This is invaluable from the client perspective. Not only have you improved their financial situation, but you have literally made an impact on how they live their life.
And how important is that?
How Do You Start Cash Flow Advisory?
We're obviously passionate about cash flow. We definitely love to help bookkeeping and accounting professionals provide cash flow advisory to their clients. In doing so we know we can make a big difference in the world (read the section above!).
If you've read to this point you know that cash flow is essential and can make a difference to small business owners in many different ways. But perhaps you are left wondering: where do I start?
Here, we have several great resources that can help:
- Take a look at our blog article How Do I Start Cash Flow Advisory?
- Download a copy of our Cash Flow Advisory: The Definitive Guide
New to Helm? Book a demo with our sales team to see our amazing cash flow forecasting and cash management tool in action!
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