BUSA 1105 chapter 2

running a business

A business, combines resources to produce goods or services. Entrepreneurship means setting up a business to make a profit.

Manage your time efficiently- Why Do Businesses Succeed

A new business owner can expect to work sixty hours a week. If you want to grow a business and have some type of nonwork life at the same time, you'll have to give up some control—to let others take over some of the work. Thus, you must develop time-management skills and learn how to delegate responsibility.

SBA Questions

Am I a self-starter? You'll need to develop and follow through on your ideas. You'll need to be able to organize your time. How well do I get along with different personalities? You'll need to develop working relationships with a variety of people, including unreliable vendors and sometimes cranky customers. How good am I at making decisions? You'll be making decisions constantly—often under pressure. Do I have the physical and emotional stamina? Can you handle six or seven workdays of as long as twelve hours every week? How well do I plan and organize? If you can't stay organized, you'll get swamped by the details. In fact, poor planning is the culprit in most business failures. Is my drive strong enough? You'll need to be highly motivated to withstand bad periods in your business, and simply being responsible for your business's success can cause you to burn out. How will my business affect my family? Family members need to know what to expect before you begin a business venture, such as financial difficulties and a more modest standard of living.

Disadvantages of Small Business Ownership (Stress)

As a business owner, you are the business. There's a bewildering array of things to worry about—competition, employees, bills, equipment breakdowns, customer problems. As the owner, you're also responsible for the well-being of your employees.

Advantage Of small Business Ownership (Creative Freedom and Personal Satisfaction)

As a business owner, you'll be able to work in a field that you really enjoy. You'll be able to put your skills and knowledge to use, and you'll gain personal satisfaction from implementing your ideas, working directly with customers, and watching your business succeed.

Advantage Of small Business Ownership (Learning Opportunities)

As a business owner, you'll be involved in all aspects of your business. This situation creates numerous opportunities to gain a thorough understanding of the various business functions.

Advantage Of small Business Ownership (Independence)

As a business owner, you're your own boss. You can't get fired. More importantly, you have the freedom to make the decisions that are crucial to your own business success.

Ownership Options

As we've already seen, you can become a small business owner in one of three ways—by starting a new business, buying an existing one, or obtaining a franchise. Let's look more closely at the advantages and disadvantages of each option.

small business do the following

Create jobs Spark innovation Provide opportunities for many people, including women and minorities, to achieve financial success and independence In addition, they complement the economic activity of large organizations by providing them with components, services, and distribution of their products.

Know how to compete- Why Do Businesses Succeed

Find your niche in the marketplace, keep an eye on your competitors, and be prepared to react to changes in the marketplace. The history of business (and much of life) can be summed up in three words: "Adapt or perish."

The Business Idea

For some people, coming up with a great business idea is a gratifying adventure. For most, however, it's a daunting task. The key to coming up with a business idea is identifying something that customers want—or, perhaps more importantly, filling an unmet need. Your business will probably survive only if its purpose is to satisfy its customers—the ultimate users of its goods or services. In coming up with a business idea, don't ask, "What do we want to sell?" but rather, "What does the customer want to buy?

Appendices (Section of Business Plan)

Here, you furnish supplemental information that may be of interest to the reader. In addition to a set of financial statements, for example, you might attach the résumés of your management tea

Know how to manage people- Why Do Businesses Succeed

Hiring, keeping, and managing good people are crucial to business success. As your business grows, you'll depend more on your employees. You need to develop a positive working relationship with them, train them properly, and motivate them to provide quality goods or services.

SBA program in which a businessperson needing advice is matched with a member of a team of retired executives working as volunteer

If you need individualized advice from experienced executives, you can get it through the Under the SCORE program, a businessperson needing advice is matched with someone on a team of retired executives who work as volunteers. Together, the SBDC and SCORE help more than a million small businesspersons every year.

Advantage Of small Business Ownership (Financial Rewards)

In spite of high financial risk, running your own business gives you a chance to make more money than if you were employed by someone else. You benefit from your own hard work. Otherwise, the harder you work, the better your boss's vacation.

Management Plan (Qualifications of Management team and Compensation Package)

It isn't enough merely to have a good business idea: you need a talented management team that can turn your concept into a profitable venture. This part of the management plan section provides information about the qualifications of each member of the management team. Its purpose is to convince the reader that the company will be run by experienced, well-qualified managers. It describes each individual's education, experience, and expertise, as well as each person's responsibilities. It also indicates the estimated annual salary to be paid to each member of the management team.

know your business- Why Do Businesses Succeed

It seems obvious, but it's worth mentioning: successful businesspeople know what they're doing. They're knowledgeable about the industry in which they operate (both as it stands today and where it's headed), and they know who their competitors are. They know how to attract customers and who the best suppliers and distributors are, and they understand the impact of technology on their business.

Get Adequate Funding- Why Do Businesses Succeed

It takes a lot of money to start a business and guide it through the start-up phase (which can last for more than a year). You can have the most brilliant idea in the world, the best marketing approach, and a talented management team, yet if you run out of cash, your career as a business owner could be brief. Plan for the long term and work with lenders and investors to ensure that you'll have sufficient funds to get open, stay open during the start-up phase, and, ultimately, expand.

Bad business idea- Why Do Businesses Fail

Like any idea, a business idea can be flawed, either in the conception or in the execution. If you tried selling snowblowers in Hawaii, you could count on little competition, but you'd still be doomed to failure.

Management Plan (Section of Business Plan)

Management makes the key decisions for the business, such as its legal form and organizational structure. This section of the business plan should outline these decisions and provide information about the qualifications of the key management personnel. Legal Form of Organization Qualifications of Management team and Compensation Package Organizational Structurere

Managerial Inexperience or Incompetence- Why do Business Fail

Many new business owners have no experience in running a business; many have limited management skills. Maybe an owner knows how to make or market a product but doesn't know how to manage people. Maybe an owner can't attract and keep talented employees. Maybe an owner has poor leadership skills and isn't willing to plan ahead.

Executive Summary (Section of Business Plan)

Overview emphasizing the key points of a business plan to get the reader excited about the business's prospects. is a one- to three-page overview of the business plan. It's actually the most important part of the business plan: it's what the reader looks at first, and if it doesn't capture the reader's attention, it might be the only thing that he or she looks at. It should therefore emphasize the key points of the plan and get the reader excited about the prospects of the business. Even though the executive summary is the first thing read, it's written after the other sections of the plan are completed. An effective approach in writing the executive summary is to paraphrase key sentences from each section of the business plan. This process will ensure that the key information of each section is included in the executive summary.

Disadvantages of Small Business Ownership (Time Commitment)

People often start businesses so that they'll have more time to spend with their families. Unfortunately, running a business is extremely time-consuming. In theory, you have the freedom to take time off, but in reality, you may not be able to get away. In fact, you'll probably have less free time than you'd have working for someone else. For many entrepreneurs and small business owners, a forty-hour workweek is a myth; in a recent survey of business owners, more than 80 percent of the owners reported working more than forty-plus hours a week (see Figure 2.8). Vacations will be difficult to take and will often be interrupted. In recent years, the difficulty of getting away from the job has been compounded by cell phones, iPhones, Internet-connected laptops and iPads, and many small business owners have come to regret that they're always reachable.

Bad Industries to Start A business

Restaurants like pizza Transportation like Taxi Shops like clothing or cell phone shops

Small Business Development Centers (SBDC)

SBA program in which centers housed at colleges and other locations provide free training and technical information to current and prospective small business owners. assists current and prospective small business owners with business problems and provides free training and technical information on all aspects of small business management. These services are available at approximately 1,000 locations around the country, many housed at colleges and universities.

Fear of Starting a Business (Lack Of Ideas)

Some are enticed by the possibility of starting a business, but they cannot decide what type of business they want to launch.

Fear of Starting a Business (Competition)

Some wonder if they can compete. They question whether their business idea is really better than what some others are doing.

Risk Taking

The term risk means that the outcome of the entrepreneurial venture can't be known. Entrepreneurs, therefore, are always working under a certain degree of uncertainty, and they can't know the outcomes of many of the decisions that they have to make. Consequently, many of the steps they take are motivated mainly by their confidence in the innovation and in their understanding of the business environment in which they're operating.

Marketing (Section of Business plan)

This critical section focuses on four marketing-related areas—target market, pricing, distribution, and promotion: Target market. Describe future customers and profile them according to age, gender, income, interests, and so forth. If your company will sell to other companies, describe your typical business customer. Pricing. State the proposed price for each product. Compare your pricing strategy to that of competitors. Distribution. Explain how your goods or services will be distributed to customers. Indicate whether they'll be sold directly to customers or through retail outlets. Promotion. Explain your promotion strategy, indicating what types of advertising you'll be using. In addition, if you intend to use the Internet to promote or sell your products, also provide answers to these questions: Will your company have a website? Who will visit the site? What will the site look like? What information will it supply? Will you sell products over the Internet? How will you attract customers to your site and entice them to buy from your company? Will you use social media to market your products and/or services?

Management Plan (Legal Form of Organization)

This section identifies the chosen legal form of business ownership: sole proprietorship (personal ownership), partnership (ownership shared with one or more partners), or corporation (ownership through shares of stock).

Management Plan (Organizational Structure)

This section of the management plan describes the relationships among individuals within the company, listing the major responsibilities of each member of the management team.

Cash Problems- Why do Business Fail

Too many new businesses are underfunded. The owner borrows enough money to set up the business but doesn't have enough extra cash to operate during the start-up phase, when very little money is coming in but a lot is going out.

Questions To ask Before You start a Business

What, exactly, is my business idea? Is it feasible? What type of business is right for me? What industry do I want to get into? Do I want to be a manufacturer, a retailer, or a wholesaler? Do I want to provide professional or personal services? Do I want to start a business that I can operate out of my home? Do I want to run a business that's similar to many existing businesses? Do I want to innovate—to create a new product or a new approach to doing business? Do I want to start a new business, buy an existing one, or buy a franchise? Do I want to start the business by myself or with others? What form of business organization do I want?

Have the Proper Attitude- Why Do Businesses Succeed

When you own a business, you are the business. If you're going to devote the time and energy needed to transform an idea into a successful venture, you need to have a passion for your work. You should believe in what you're doing and make a strong personal commitment to your business.

Disadvantages of Small Business Ownership (Undesirable Duties)

When you start up, you'll undoubtedly be responsible for either doing or overseeing just about everything that needs to be done. You can get bogged down in detail work that you don't enjoy. As a business owner, you'll probably have to perform some unpleasant tasks, like firing people.

Satisfy your customers- Why Do Businesses Succeed

You might attract customers through impressive advertising campaigns, but you'll keep them only by providing quality goods or services. Commit yourself to satisfying—or even exceeding—customer needs.

Franchise

+-rm of business ownership in which a franchiser (a seller) grants a franchisee( a buyer) the right to use a brand name and to sell its products or services. Franchises market products in a variety of industries, including food, retail, hotels, travel, real estate, business services, cleaning services, and even weight-loss centers and wedding services. Franchising has become an extremely popular way to do business. A new franchise outlet opens once every eight minutes in the United States, where one in ten businesses is now a franchise. Franchises in the U.S. employ 8 million people (13 percent of the workforce) and account for 17 percent of all sales in this country ($1.3 trillion). Franchising is prevalent in several industries: 59 percent of fast-food restaurants and 47 percent of hotels are franchises while it is non-existent in others. In addition to the right to use a company's brand name and sell its products, the franchisee gets help in picking a location, starting and operating the business, and advertising. In effect, you've bought a prepackaged, ready-to-go business that's proven successful elsewhere. You also get ongoing support from the franchiser, which has a vested interest in your success. Not surprisingly, these advantages don't come cheaply. Franchises can be very expensive, usually depending on the amount of business that a franchisee is expected to do. Kentucky Fried Chicken (KFC) franchises, for example, require a total investment of $1.5 million to $2.6 million each. This fee includes the cost of the property, equipment, training, start-up costs, and the franchise fee—a one-time charge for the right to operate as a KFC outlet. McDonald's is in the same price range ($1 million to $2.2 million). SUBWAY sandwich shops are more affordable, with expected total investment ranging from $117,000 to $263,000. If you'd prefer teaching dance and exercise classes, you could get a Jazzercise franchise for anywhere from $3,500 to $13,000. But be careful in picking a franchise: many go bust. For example, in the mid-1990s dating franchises were a big deal. But then, like lots of relationships, things went sour; those looking for love went to other places, and the dating franchises folded. In addition to your initial investment, you'll have to pay two other fees on a monthly basis—a royalty fee (typically from 3 to 12 percent of sales) for the inued support from the franchiser and the right to keep using the company's trade name, plus an advertising fee to cover your share of national and regional advertising. You'll also be expected to buy your products from the franchiser.

Lack Of Customer Focus- Why do Business Fail

A major advantage of a small business is the ability to provide special attention to customers. But some small businesses fail to seize this advantage. Perhaps the owner doesn't anticipate customers' needs or keep up with changing markets or the customer-focused practices of competitors.

Small Business

According to the SBA, a business that is independently owned and operated, is organized for profit, and is not dominant in its field. To meet the SBA's definition of a small business, the organization must also be of a certain size, which varies by industry. For example, a manufacturing company would be classified as a small business if it has a maximum range of 500-1,500 employees (depending on the type of product it produces). A service firm would be classified as a small business if its revenues do not exceed $2.5-$38.5 million (depending on the type of service provided)

Good Producing Sector

All Businesses whose primary purpose is to produce tangible goods. Generally speaking, companies in this sector are involved in manufacturing, construction, and agriculture. The largest areas of the goods-producing sector are construction and manufacturing. Construction businesses are often started by skilled workers, such as electricians, painters, and plumbers. They tend to be small and generally work on local projects. Though manufacturing is primarily the domain of large businesses, there are exceptions. Baby Think It Over/Realityworks, for example, is a manufacturing enterprise (components come from Ohio and China, and assembly is done in Wisconsin). About 20 percent of small businesses in the United States are concentrated in the goods-producing sector. The remaining 80 percent are in the service sector. The high concentration of small businesses in the service-producing sector reflects the makeup of the overall U.S. economy. Over the past fifty years, the service-producing sector has been growing at an impressive rate. In 1960, for example, the goods-producing sector accounted for 38 percent of GDP, the service-producing sector for 62 percent. By 2010, the difference was even more lopsided, with the goods-producing sector accounting for only 23 percent of GDP, while the service-producing sector had grown to 77 percent.

Service Producing Sector

All businesses whose primary purpose is to provide a service rather than make tangible goods. They may be involved in retail and wholesale trade, transportation, finance, insurance, real estate, arts, entertainment, recreation, accommodations, food service, education, and such professional activities as technical services, health care, advertising, accounting, and personal services. Many small businesses in this sector are retailers—they buy goods from other firms and sell them to consumers in stores, by phone, through direct mailings, or over the Internet. In fact, entrepreneurs are turning increasingly to the Internet as a venue for start-up ventures. Tony Roeder, for example, who had a fascination with the red Radio Flyer wagons that many of today's adults had owned as children. In 1998, he started an online store through Yahoo! to sell red wagons from his home. In three years, he turned his online store into a million-dollar business. When we talk about Internet entrepreneurs, we have to mention Mark Zuckerberg, the king of Internet entrepreneurship. As is well known, he founded Facebook while a student at Harvard and, by age 27, had built up a personal wealth of $55 billion. Other small business owners in this sector are wholesalers—they sell products to businesses that buy them for resale or for company use. A local bakery, for example, is acting as a wholesaler when it sells desserts to a restaurant, which then resells them to its customers. A small business that buys flowers from a local grower (the manufacturer) and resells them to a retail store is another example of a wholesaler. A high proportion of small businesses in this sector provide professional, business, or personal services. Doctors and dentists are part of the service industry, as are insurance agents, accountants, and lawyers. So are businesses that provide personal services, such as dry cleaning and hairdressing.

Innovation

Entrepreneurship generally means offering a new product, applying a new technique or technology, opening a new market, or developing a new form of organization for the purpose of producing or enhancing a product.

Business Plan

Formal document describing a proposed business concept, description of the proposed business, industry analysis, mission statement and core values, a management plan, a description of goods or services, a description of production processes, and marketing and financial plans Think of a business plan as a blueprint for a proposed company: it shows how you intend to build the company and how you intend to make sure that it's sturdy. You must also take a second crucial step before you actually start up your business: You need to get financing—the money from individuals, banks, or both, that you'll need to get your business off the ground. (Obviously, if you already have the necessary funds, you're one of the fortunate few who can skip this step.)

Fear of Starting a Business (Security)

Getting a paycheck on a regular basis is comforting. Many would-be entrepreneurs are unwilling to give up the safety of a dependable job.

Small Business Administration (SBA)

Government agency that helps prospective owners set up small businesses, obtain financing, and manage ongoing operations

Description of Proposed business (Section of Business Plan)

Here, you present a brief description of the company and tell the reader why you're starting your business, what benefits it provides, and why it will be successful. Some of the questions to answer in this section include the following: What will your proposed company do? Will it be a manufacturer, a retailer, or a service provider? What goods or services will it provide? Why are your goods or services unique? Who will be your main customers? How will your goods or services be sold? Where will your business be located? Because later parts of the plan will provide more detailed discussions of many of these issues, this section should provide only an overview of these topics.

Buying an existing business

If you decide to buy an existing business, some things will be easier. You'll already have a proven product, current customers, active suppliers, a known location, and trained employees. You'll also find it much easier to predict the business's future success. There are, of course, a few bumps in this road to business ownership. First, it's hard to determine how much you should pay for a business. You can easily determine how much things like buildings and equipment are worth, but how much should you pay for the fact that the business already has steady customers? In addition, a business, like a used car, might have performance problems that you can't detect without a test drive (an option, unfortunately, that you don't get when you're buying a business). Perhaps the current owners have disappointed customers; maybe the location isn't as good as it used to be. You might inherit employees that you wouldn't have hired yourself. Finally, what if the previous owners set up a competing business that draws away their former—and your current—customers?

Financial Plan (Section of Business Plan)

In preparing the financial section of your business plan, specify the company's cash needs and explain how you'll be able to repay debt. This information is vital in obtaining financing. It reports the amount of cash needed by the company for start-up and initial operations and provides an overview of proposed funding sources. It presents financial projections, including expected sales, costs, and profits (or losses). It refers to a set of financial statements included in an appendix to the business plan.

Global Issues (Section Of Business Plan)

In this section, indicate whether you'll be involved in international markets, by either buying or selling in other countries. If you're going to operate across borders, identify the challenges that you'll face in your global environment, and explain how you'll meet them. If you don't plan initially to be involved in international markets, state what strategies, if any, you'll use to move into international markets when the time comes.

Entrepreneur

Individual who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it

Mission Core Statement and Core Values (Section of Business Plan)

Mission Statement- Statement describing an organization's purpose or mission—its reason for existence—and telling stakeholders what the organization is committed to doing It tells the reader what the organization is committed to doing. For example, one mission statement reads, "The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Core Values- Statement of fundamental beliefs describing what's appropriate and important in conducting organizational activities and providing a guide for the behavior of organization members Core values are not about profits, but rather about ideals. They should help guide the behavior of individuals in the organization. Coca-Cola, for example, intends that its core values—leadership, collaboration, integrity, accountability, passion, diversity, and quality—will let employees know what behaviors are (and aren't) acceptable.

Advantage Of small Business Ownership (LifeStyle)

Owning a small business gives you certain lifestyle advantages. Because you're in charge, you decide when and where you want to work. If you want to spend more time on nonwork activities or with your family, you don't have to ask for the time off. If it's important that you be with your family all day, you might decide to run your business from your home. Given today's technology, it's relatively easy to do. Moreover, it eliminates commuting time.

Fear of starting a Business (Money)

Starting a business and operating it until the company generates a steady stream of revenue requires a considerable amount of cash, which often comes from personal savings or borrowings.

Disadvantages of owning a franchise

The cost of obtaining and running a franchise can be high, and you have to play by the franchiser's rules, even when you disagree with them. The franchiser maintains a great deal of control over its franchisees. For example, if you own a fast-food franchise, the franchise agreement will likely dictate the food and beverages you can sell; the methods used to store, prepare, and serve the food; and the prices you'll charge. In addition, the agreement will dictate what the premises will look like and how they'll be maintained. Finally, franchisers don't always keep their promises. What do you do if the promised advertising or employee training doesn't materialize? What do you do if you're forced to make unnecessary and costly alterations to your premises, or the franchising company sets up a competing establishment nearby? What if the franchising company gets bad press, which, in turn, hurts your sales? You always have the option of suing the franchiser, but this is time-consuming and costly. As with any business venture, you need to do your homework before investing in a franchise.

Disadvantages of Small Business Ownership (Financial Risk)

The financial resources needed to start and grow a business can be extensive. You may need to commit most of your savings or even go into debt to get started. If things don't go well, you may face substantial financial loss. In addition, there's no guaranteed income. There might be times, especially in the first few years, when the business isn't generating enough cash for you to live on.

Starting From Scratch

The most common—and the riskiest—option is starting from scratch. This approach lets you start with a clean slate and allows you to build the business the way you want. You select the goods or services that you're going to offer, secure your location, and hire your employees, and then it's up to you to develop your customer base and build your reputation. This is the path taken by Andres Mason, who figured out how to inject hysteria into the process of bargain hunting on the Web. The result is an overnight success story called Groupon. Here is how Groupon (a blend of the words "group" and "coupon") works: A daily e-mail is sent to 34 million people in 175 North American markets and 47 countries offering a deeply discounted deal to buy something or to do something in their city. If the person receiving the e-mail likes the deal, he or she commits to buying it. But, here's the catch, if not enough people sign up for the deal, it is cancelled. Groupon makes money by keeping about half of the revenue from the deal. The company offering the product or service gets exposure. But stay tuned: the "daily deals website isn't just unprofitable—it's bleeding hundreds of millions of dollars." As with all start-ups, cash is always a problem—a very serious problem if it's your own cash.

Sections of the Business Plan

Though formats can vary, a business plan generally includes the following sections: executive summary, description of proposed business, industry analysis, mission statement and core values, management plan, goods or services and (if applicable) production processes, marketing, global issues, and financial plan. Let's explore each of these sections in more detail. (Note: More detailed documents and an Excel template are available for those classes in which the optional business plan project is assigned.)

Distinguishing Entrepreneurs from Small Business Owners

Though most entrepreneurial ventures begin as small businesses, not all small business owners are entrepreneurs. Entrepreneurs are innovators who start companies to create new or improved products. They strive to meet a need that's not being met, and their goal is to grow the business and eventually expand into other markets. In contrast, many people either start or buy small businesses for the sole purpose of providing an income for themselves and their families. They do not intend to be particularly innovative, nor do they plan to expand significantly. This desire to operate is what's sometimes called a "lifestyle business." The neighborhood pizza parlor or beauty shop, the self-employed consultant who works out of the home, and even a local printing company—all of these are typical lifestyle businesses. In Chapter 2, Section 3 "The Importance of Small Business to the U.S. Economy", we discuss the positive influences that both lifestyle and entrepreneurial businesses have on the U.S. economy. Entrepreneurs: Fact and Fiction

Goods, Services, and the Production Process (Section of a Business Plan)

To succeed in attracting investors and lenders, you must be able to describe your goods or services clearly (and enthusiastically). Here, you describe all the goods and services that you will provide the marketplace. This section explains why your proposed offerings are better than those of competitors and indicates what market needs will be met by your goods or services. In other words, it addresses a key question: What competitive advantage will the company's goods and services have over similar products on the market? This section also indicates how you plan to obtain or make your products. Naturally, the write-up will vary, depending on whether you're proposing a service company, a retailer, or a manufacturer. If it's a service company, describe the process by which you'll deliver your services. If it's a retail company, tell the reader where you'll purchase products for resale. If you're going to be a manufacturer, you must furnish information on product design, development, and production processes. You must address questions such as the following: How will products be designed? What technology will be needed to design and manufacture products? Will the company run its own production facilities, or will its products be manufactured by someone else? Where will production facilities be located? What type of equipment will be used? What are the design and layout of the facilities? How many workers will be employed in the production process? How many units will be produced? How will the company ensure that products are of high quality?

Know the Basics of Business Management- Why Do Businesses Succeed

You might be able to start a business on the basis of a great idea, but to manage it you need to understand the functional areas of business—accounting, finance, management, marketing, and production. You need to be a salesperson, as well as a decision maker and a planner.

Inability to handle growth- Why do Business Fail

You'd think that a sales increase would be a good thing. Often it is, of course, but sometimes it can be a major problem. When a company grows, the owner's role changes. He or she needs to delegate work to others and build a business structure that can handle the increase in volume. Some owners don't make the transition and find themselves overwhelmed. Things don't get done, customers become unhappy, and expansion actually damages the company.

manage your money effectively- Why Do Businesses Succeed

You'll be under constant pressure to come up with the money to meet payroll and pay your other bills. That's why you need to keep an eye on cash flow—money coming in and money going out. You need to control costs and collect money that's owed you, and, generally, you need to know how to gather the financial information that you require to run your business.