Lack of funding and business failure: Two peas in a pod
Money makes the world go round and well it surely is needed in order to make business survive and grow. As to build up your working capital, a business’s current assets must be greater than current liabilities, if not the business will fail, unfortunately.
Due to the fact that business depends heavily on its ability to sell products, get paid and meet obligations. In order for business to reload inventories, expand and grow. If not it can threaten the businesses ability to meet future obligations as well as lead to business failure.
Lack of funding such as inadequate access to working capital and other financing issues are a huge contributor to a business’s lack of success. And there are many factors that go into a business owner’s lack of working capital.
•From a low credit score and inability to borrow from traditional financing sources.
•To operational issues affecting cash flow.
Unfortunately, a component of your current assets is your accounts receivable. When you work with customers who are slow payers or out of cycle with your accounts payable or bills you pay, you wind up with a cash flow situation that is unsustainable over time.
Having several months of cash available to you to fund those gaps in funding would be ideal for most businesses. When you lack the ability to access funding resources like those traditionally provided by banks, your business does suffer.