According to Karen Mills, the former head of the U.S. Small Business Administration (SBA) during President Barack Obama’s presidency, not understanding cash forecast is the most common mistake that small business owners make.
Small business owners “create a path to the American dream’
There are 30.7 million small businesses in the U.S. and approximately half of America’s private workforce are employed at a small business–which is defined by the SBA as a company that employs 500 people or less.
“They create a path to the American dream, so it’s not only part of the economy, but it’s part of economic mobility,” Mills said.
Mills’ grandfather, an immigrant from Russia, started a textile business with just two machines in the back of a Boston shoe shop that grew into a company employing hundreds of people taking care of their families. According to Mills, “that’s the American dream, the ability to come to this country without anything, without resources, without advantages, and have access and opportunity.”
“A terrific time to start a small business’
Something smaller businesses lose sight of — especially when they have to contend with bigger corporations such as Amazon — is not being prepared for obstacles to arise with their starting investment, like stocking up their inventory and being ready for late payments from customers or shipments. How are they going to generate the resources they need to stay in business and pay their employees?”
Mills noted that the era of FinTech, is actually a good time to start a small business because more tools and resources are available and cheap because of technology.