Recently I met a young man who does marketing and works to promote female entrepreneurs. Invariably I checked out the website and Facebook page. There was an article about the 7 things that a a small start up or small business should do. For the most part it was a good article (although it did state that you should always pay top dollar for marketing) but I was shocked when it came to finance it stated that if you can't find a financial guru "just find someone who can manage money". This is irresponsible, dollars are the life blood of any business and the odds are already against small businesses.
Financial experts are no longer scorekeepers, they are a CEO's strategic partner responsible for helping determine the drivers for the business, how best to measure them and provide decision support. The world of finances has moved beyond counting cash and taxes and require analytics and decision science. Operations are heavily reflected in financial activity. Financial experts can interpret results and help the CEO develop overall strategy as it relates to the business. A financial expert or business manager can also help navigate a small firm as it starts out.
All data continues to show that small businesses fail and that many of the reasons is related to finances.
Small business stats:
1) There are almost 28 million small businesses in the US and over 22 million are self employed
2) Over 50% of the working population work in small businesses
3) About 543,000 new businesses start each month but right now more businesses shut down than start up
4) 7 out of 10 firms survive the first two years, half survive five years, a third survive ten years and only a quarter survive over 15 years
5) Number one reason businesses fail is because they run out of money
Research from the 2013 Global Entrepreneurship Monitor report which was produced by Babson College and other universities found that the top reasons for businesses closing in the U.S. were problems related to financing and lack of profitability, these were cited in more than half of businesses that closed.
This is the reason why a financial expert is crucial for small firms and start-ups. While we can understand that finances are not as sexy as marketing there is nothing sexy about bankruptcy or failure. Small businesses need a good strong team. While your marketer is responsible for crafting your message and telling the story of your small business a financial expert will help you navigate your small firm or start up through the dangerous waters.
Consider these questions: Do you know your burn rate? What is your break-even point? How much cash or time do you need before you get there? How much operating cash do you have on hand now if your business had to stop operations and how many days would that cash last? How much revenue is your marketing generating? Not how many click or 'Likes', while these can sound impressive ask what percent of clicks and likes become paying customers. Someone who can only manage money can't give you that information. Do the questions give you pause as a small business owner? They should. The answer to these questions can mean the difference between success and failure. A financial expert, a guru, can help your small firm from becoming another data point in the vast records of closed businesses.