Do you sleep well? I know I haven’t in the past. Business owners lose sleep over many valid concerns. Topping the list is financial stability followed by competition, employee management, customer satisfaction, regulatory compliance, and the overall growth and success of their business; however, nothing can hold a business back like money problems. Stats show that 18% of businesses fail within their first year and 50% within the first five years. A great many business closures directly result from poor cash management.

When starting a business there is a continuum of four steps, Survival, Stability, Success and Significance. They give direction to a business owner for achieving success.

THE 4S'S TO FINANCIAL STABILITY

1.      SURVIVAL

Start-ups require enough capital to purchase or rent premises, purchase equipment, purchase raw materials, hire staff and pay for marketing their products to bring them to light. The Survival phase is arguably the nail-biting, sleep-deprived, most difficult to live through. The Oxford dictionary defines ‘survival’ as: the state or fact of continuing to live or exist, typically despite an ordeal, or difficult circumstances.

Survival requires a certain mindset focused on success and resiliency to overcome challenges. Active investment in time and resources into proper cash management are paramount in business success. Having the right resources, having guidance in finding the right resources and understanding that survival is dependent on accepting the expertise of knowledgeable external resources are fundamental.

2.      STABILITY

Financial stability exists when your business finances can facilitate and enhance necessary fiscal processes, manage risks, and absorb shocks. Do you have revenue to cover your expenses, as well as funds to put aside for a potential crisis, e.g. a pandemic? Business owners must embed cash-conscious behavior into all their activities. Sound cash management will provide a business with enough accessible resources to allow for flexibility and maintain resiliency. Achieving financial stability is an ever-evolving process that involves overcoming fear and identifying and prioritizing productive action, oftentimes with the help of an advisor or business coach. Don’t wait until it is too late!

3.      SUCCESS

I like this definition of financial success: “it is not so much about earning money as it is about making choices about how you will use your money”. But how do you get to a place of choice in how to use your money? You have a sound business plan in place; you have built an emergency fund; you are in control of your debts; you pay bills on time. Choose carefully; the money will follow, but it never comes first!  Every decision has a cost, so be sure to consider your options. When the fundamentals are in place, there is a freedom in choice on how to invest or where to spend the money.

4.      SIGNIFICANCE

Looking inwardly, financial stability can alleviate stress, provide comfort, and enhance the overall quality of life. Can money buy happiness? Some say it can; however, quality of life includes looking outward. Again, it allows the freedom of choice in how to ‘use’ or spend money that has been gained because of financial stability and success. It is about sharing your gifts often in service to others. Much like achieving financial success with the help of many, there is satisfaction and gratitude when rewarding those who have been pivotal in helping you achieve your success.

Financial stability is not failsafe, it is not guaranteed and reaching it takes hard work. The process is fluid and requires continuous adjustments to meet the challenges of business ownership. With the proper plan and resources in place, sleep should come more easily to business owners.