Of course, there are many reasons why a business fails. But the predominant contributor to small business carnage is failure to understand the financial fundamentals, more specifically, not understanding cash flow or how to capitalize growth.

So, if you don't want to become part of a gruesome statistic, take the following suggestions seriously:

Produce regular (at least quarterly) and accurate financial statements (balance sheet and profit-and-loss).

Hire an accounting firm to help you. Too expensive? How expensive is failure?

Purchase and use one of the financial management software programs. Ask your CPA for a recommendation.

Track sales-to-expense ratios each month in order to know when to adjust spending.

Understand how to monitor inventory levels with regard to projected sales, receivables and cash.

Learn how to calculate Accounts Receivable days and Accounts Payable days, and understand their relationship to each other, plus the impact of that relationship on cash flow and working capital. If your company is experiencing rapid growth, disregard this fundamental at your peril.

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Mange your slow payers

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"Credit Control is not the same as Debt Collection"

GRD Credit Control Services

This article sums up the difference between credit control and deby collection succinctly.

Well done!

"The majority firms have a Credit Control Department. Even the majority One-Man operations have a policy and system of some sort. The upset for many firms begins when the debtor just doesn't pay."

Specially in a Credit Crunch You really need a Debt Collection Process that

All small businesses need a process for chasing slow payers. If you are a small busineness and you don't like chasing slow players or just don't have time then consider your options carefully.

"Who is in control of your organization? Whoever controls the cash inflow, cash outflow, or holds your grants or accounts receivable. Get control of it NOW. Make sure YOU are in control of expenditures and that a good system of checks and balances are in place. Key an eye on the register; nervous people do stupid things. Who owes you money? Time to make some "Bitch where's my money" phone calls!"

Buckle Up, It's Going To Be A Bumpy Ride « Wild Sheep Chasing

An entertaining viewpoint

Surviving In Tough Times: Getting More From Your Sales - Ecademy

Some real life pointers. Do you run your business this way? and can you improve your processes?