If data is to believe, 5 out of 10 businesses touching the 50% mark fail to sustain a company for five years. Only 2 out of 10 firms reach the ten-year mark. In all, the business sustainability and longevity have a poor score. But what is it that is actually contributing to the cause?

Many business research has been going on to find reasons for failure and the reasons include factors like:

• Lack of marketing approach and strategy
• Inadequate way of product offering
• Customer service lacking the right communication
• Inefficient business model

While all these factors are categorized in the secondary list, the primary and most common reason is the lack of stable finance management.

When we use the resources efficiently with a vision of being sustainable, less seems more!

Allocation of the right resources in the right sector is integral to efficient finance management. Everyone starts small; that’s the first part towards achieving something enormously magnificent in future. Our back-office accounting outsourcing firm sections the crucial aspects of accounting, enabling a balance that results in positive outcomes.  

Let’s look at all possible reasons that lead to a disbalance in finance structure, disrupting longevity and growth.

An improper budget

Budgeting is an integral step. A budget is a formal spending plan for a business that is created based on income and expenses. There is a certain capital that you invest in the business, and everything needs to go according to that. A survey report has revealed that 60% of start-up businesses did not have a planned and formulated budget plan. This is clear enough to state to talk about the reduced accomplishment rate.

Disbalance in cash-flow management

Studies have found that cash-flow disbalance lead is a very prominent reason for small business failure. After all, when you don’t have a regulatory budget, there’s no cash inflow and outflow management. Many a time in small businesses, the sale is high, but there is still not enough cash available with the companies. This could be because of improper trade receivable or trade payable processes functioning. So, the growth always doesn’t rely on sales; the significant measure of sustainably managing the income and expenses is crucial.

Credit and Debit transactions

Credit and Debit imbalance can be due to:

Poor sales

Economic downturns

Improper cash flow

Easy credit options like loans relate to problems like extremely high-interest rates, strict lending systems, and problematic lines of communication. All this takes the business towards increased debts.  

One simple solution for this problem is to hold on to finance and accounting management to resolve any trading problems.

FinConcile is a UK-based outsourcer enabling businesses to navigate problems related to the financial structure. Find us to avail of our services now!