Kabbage recently surveyed 500 successful entrepreneurs across various industries, about one of the biggest obstacles that affect all businesses — cash flow.
In any business, the availability of back-up funds can mean the difference between being able to expand inventory, add staff orinvest in measures to grow the company.
Cash flow balancing can easily go awry due to unexpected factors such as delayed payments, sudden big expenses and improper growth forecasts – issues that are common in entrepreneurship. Yet, more than 30 million (according to the Small Business Administration) U.S. entrepreneurs persist despite the cash-flow challenges.
Business survival comes with a price. Here are the common challenges that cash-flow issues create.
Putting Off the Entrepreneur’s Paycheck
Some 51 percent of small business owners surveyed in the Kabbage study said they forgo paying themselves for multiple months to control cash flow.
Investing extra time
Time is precious especially for an entrepreneur who is running a company and is responsible for every aspect of its operation. The survey showed that 91 percent of small business owners spent as much as 20 hours per week on cash-flow management, from handling payroll to invoicing and purchasing.
Evaluate the Business
So, how can small business owners reclaim their time? All businesses are different, so the first step is to pay close attention to how much time is spent on various cash-flow tasks, from invoicing and payroll to accounting, taxes and more. Then, determine which task is taking up a big amount of time and research ways to accomplish tasks faster.
Here are four ways technology is evolving to help entrepreneurs reclaim their time:
- Invoicing: New technologies are providing entrepreneurs with easier and faster ways to manage customer invoicing so they can get paid faster. Bill.com claims that it lets small businesses get paid up to three times faster through automation.
- Financing: Machine learning and predictive analytics are revolutionizing funding options to help resolve cash-flow issues for small businesses. An example is Alibaba.com’s Pay Later which provides up to $150,000.00 credit option to buy goods that will help grow the business. This means that entrepreneurs will be able to access capital in minutes rather than weeks or months.
- Accounting software: The majority of every accounting process can be automated, and accounting software like Xero and Quickbooks can provide greater detail in the event of an audit as well as help in cash flow management.
- “As-a-service” offerings: Businesses are migrating entire operations to cloud technologies and monthly services which help save time and reduce unnecessary overhead costs. Systems like Zenefits for payroll or Expensify for managing expenses take care of the tedious details in cash-flow activities.