Cash flow problems can cripple a small business. In fact, this is the No. 1 reason startups fail, according to CB Insights. There are lots of reasons why a small business may run into a cash-flow crunch, including:
- Launching prematurely: Starting your business before you have sufficient capital
- High debt load: When a large chunk of your business income is going toward debt payments
- High accounts receivable: When outstanding invoices create a slowdown in capital
- Low sales: This can be seasonal or a more persistent downward trend
- Your business budget isn’t working: When your budget isn’t built to accommodate your actual income and expenses
