Cash Flow Causes Your Business’s Biggest Failure

Cash Flow is often a major problem for businesses, but most business people never realize it or pay less attention to it. Top Coach Indonesia’s research shows that on average 8 out of 10 business people tend to only pay attention to profits rather than cash flow, and maybe you are one of them too?

Even though there are so many business sad stories that tell of business failures because of ignoring cash flow, even in fact many businesses are in a profitable condition but are forced to close just because there is no cash or lack of cash to support the business. The problem is simple as that!

Friends of entrepreneurs, what insight can we take from the above circumstances? Profit does not equal to Cash! (profit ≠ cash). Cash is needed by businesses for daily operations and not profit.

If you keep wondering, without intending to scare, here we have summarized some statistical facts why you shouldn’t play around with how to manage your company’s cash flow:

1. CB Insights: “ran out of cash” is the main reason why start-up businesses fail.

CB Insights, a leading research institute in the USA published on CNBC.com [1] examined all the problems faced by companies that failed and asked the company’s business owners to rank 20 problems that caused them to fail in doing business. The results of CB Insights’s research found a surprising fact that “ran out of cash” ranked second out of 20 main reasons why their business failed.

2. Dragon’s Den CBC News: cash flow is the biggest challenge in the MSME business.

Dragon’s Den is a reality show about entrepreneurial that is very popular because it presents a real business situation with various facts that are displayed bluntly. In the Dragon’s Den chat on October 19, 2011 published in CBC News [1], on that occasion one of the questions asked to thousands of business people who participated was what was your biggest challenge in trying?

The conclusion from these business people shows that cash flow is the biggest business challenge they face (51%), followed by Marketing (21%), then Managing Staff (10%) and the last challenge is Work-leisure / Family (18% ).

3. Simply Cash Flow Limited: 51% of MSME businesses say that cash flow is the biggest challenge of their business and the failure of MSMEs in businesses caused by cash flow reaches 80%

The results of a compilation of various studies around MSMEs in various countries presented by simplycashflow.com (the leading business management blog in the UK) show that cash flow is the biggest business challenge in various countries namely Canada (51%), Ireland (32%), UK (41%) and USA (28%). The research compilation also concluded that 80% of MSMEs in the UK failed due to cash flow problems, New Zealand 66%, and 61% of Australian MSMEs failed due to cash flow issues.

4. US Bank Study, 82% of businesses fail due to lack of cash management.

A study conducted by Jessie Hagen from U.S. The bank, by studying business failures from the NPL (non-performing loan) aspects experienced by so many business people in various sectors, found 12 main reasons why businesses failed and the biggest contributor to these failures came from poor cash flow management, which amounted to 82%.

5. Top Coach Indonesia Study: 80-90% of MSMEs fail in Indonesia due to cash flow problems.

A study conducted by Top Coach Indonesia based on the observation of Top Coach Indonesia’s experience for 5 years and supported by secondary research indicates that 80-90% of MSMEs fail in Indonesia due to cash flow problems.

By having an understanding of the facts about cash flow above, it is very important for business people to take time to pay attention to the company’s cash flow, manage cash flow, and immediately take corrective actions as early as possible to deal with the existing cash flow problems, after all, isn’t cash flow is the company’s blood flow? So pay attention to your company’s cash flow so that your company can grow and develop healthily.

Value That Would Increase Your Business

More and more Business Owners have sprung up in the past 10 years. Specifically in services, culinary, fashion and electronics. All these types of businesses continue to offer innovation, creativity and new ideas in order to retain consumers and win the market.

Well, but along with that. Apparently there are many obstacles that must be faced by Business Owners. Most of them, even though they have good products. But the turnover obtained is not so much, that’s all. This means that your business is not developing. What exactly is wrong?

Remember, customers don’t just buy ideas or innovations from the products you sell. Then what? Well, it turns out that almost 97 percent of your customers move when they don’t get VALUE.

What is value?

Value is something that is very valuable to the customer. Through Value the customer will come back to you. With Value you can also bind the customer and even master the hearts of customers. So, your job is no longer to make your customers loyal. Because there is no more loyalty. There is only RELIABILITY.

If you cannot make a customer depend on you, the customer cannot be loyal. If there are other people who offer lower prices, they will definitely move. If there are other people who can provide more benefits, they will also move.

Now look at yourself. Why do you use the handphone that you are currently using? Because RELIABLE. Why do you use Facebook, Instagram for social networking? Although there are many other social media. Because RELIABLE. Are you loyal to it all? Not. Because RELIABLE.

Your goal as a leader is creating Value. So that the customer depends on you. Now, all you have to do is focus on these 3 values.

1. Physical Value

Physical Value means what is most important to your customer physically. This can be felt when you get on a plane, eat in a restaurant, or when you wash your car in a car wash. What then do you feel after using their services or products?

Do you feel comfortable with the room, seat: soft or not, temperature or smell, texture and so on.

You might get experience when you wash the car. The first time you came there, you were very impressed. The place is nice, clean and crowded.

But later, when you want to rest while waiting for your car. Apparently, the seat is very uncomfortable, hard, the room is hot, stuffy and when you are thirsty want to drink. It turns out you also have to walk far from there.

The question is, when you experience it. Will you come there tomorrow? Not. Because of what? That’s right, because it’s physically uncomfortable and you don’t feel happy about the physicality that they provide.

Just imagine, if only you start to improve the value physically. For example the waiting room, you fix better, more comfortable and you can even provide drinking water for them.

Then the customer will say, “I am very satisfied with the facilities here. It’s clean, air-conditioned. comfortable, soft seat, if thirsty not far away buy a drink across the street there. Perfect! ”

What changes occur? The first thing a customer will feel is COMFORT. Then after they are physically satisfied, they will get Value from Your Business. Then, after that your customer will definitely feel dependent on you. And of course, your turnover increases after the waiting room of your car is updated.

2. Emotional Value

What do you think is important to customers emotionally? Oh it turns out the important thing is the customer must feel calm. This can be felt when you buy insurance. What do you want. Of course, you want to be made to believe. Not nervous after buying it.

Likewise, your customer. He wants, you can make customers believe. Do not let the customer feel uneasy when dealing with you, uneasy and ultimately negative customer emotions – to you. Then, the customer’s needs to get a feel or taste – are not met. So let’s think carefully. What customers really want emotionally.

Then, the second feeling that can be experienced by customers is not feeling confident. That is, the customer feels insecure when buying your product.

Take for example when you go to a clothing store. So an SPG must be able to make you confident, when you buy and wear the clothes that you choose “Mother, I think you are getting more beautiful. More interesting with this shirt mom. It suits you, ma’am! ”

Finally you feel more confident because you have been emotionally fulfilled. The point is you have to give an emotional value to your customers. Because when you successfully provide value or positive values ​​to the customer. Then the customer will feel confident and dependent on you.

3. Price Value

Customers must feel more economical. It must be remembered, saving does not mean cheap. The point of this is that you have to make your customers think. In addition to getting quality, customers can think that the money spent, if divided by quantity and time, becomes cheap.

Such as you buy the price of a bag of 100 million. So if divided by time. The bag can last up to 10 years. Means the value of the bag is the first 10 million. Cheap or expensive? Cheap. For those of you who have the first expenditure of 20-50 million. Then it’s cheap. But it turns out there is a bag that has only been used for 1 year and is broken.

However, by buying an iPhone, you will have a lot of value that you will get. Imagine, hundreds of features divided by the price. Then, the price is the same. When these features are compared to money. The impression is cheap. Eventually people flocked to buy an Iphone.

Because the Value obtained from the iPhone is Emotion. Imagine, you don’t need to be an artist to be an artist. Once you buy an iPhone 7. you will be the center of attention. Only by buying an Iphone.

Because of that what you need to grasp to the utmost in running a business is birth dependency.