Chat with us, powered by LiveChat

Have An Umbrella For A Rainy Day.

Liquidity are the resources available to pay your bills. Usually it’s cash; it always needs to be something you can easily convert to cash. Liquidity risk is the number one issue to manage, and the lack of liquidity is the number one reason why start-ups fail. If you want to have an ongoing enterprise and you should be conservative and minimize your risks. Some typical risks to consider include:
  1. Underestimating cash outflows. Always leave yourself a cushion for just-in-case events. You may need a little more marketing investment, better computers, more staff. Shoot for 6 months of extra cash and plan to have standby or emergency capabilities if you need them (friends and family, crowdsourcing, credit cards, etc.).
  2. Over estimating cash inflows. Make sure your estimates aren’t too rosy on the sales side. It is easy to go a little crazy with overly-optimistic sales forecasts. Be reasonable. Also, be aware that completing the sale is great but your ability to spend money depends on when you collect the cash.
  3. Poor quality liquidity tracking. This issue is so important that you need to keep a laser-like focus on it. You will have a lot of things to work on in a start-up and it’s possible to get distracted. But always keep an eye on your bank account and put alerts in place in advance to notify you of important changes, especially as they relate to your plan. Don’t wait until the last minute to try to solve a liquidity problem. You will pay dearly for that and may in fact lose everything you’ve worked for.
Liquidity management is a fundamental part of planning for your business. Click here for helpful resources.
team@launchpadholdings.com

This entry has 0 replies

Comments open

Leave a reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

©2016 LaunchPadToolKit.com All Rights Reserved