Starting a business is one of the most challenging career paths that one can take, and I am sure we are all aware of that. But, the irony is, starting a business is actually the easy part, *running* a business is the real challenge. Yes, hiring can be a headache, dealing with vendors can be a hassle and creating products and marketing campaigns to pull in customers is a business in itself, however none of these compare to the defining factor of any business’s success; working capital. Liquid cash is the lifeline of any successful operation and when your survival is threatened by a lack of this asset, it becomes a life and death situation for your business. Lack of working capital creates a stressful environment and limits a company’s potential, but it can also teach you valuable life-long lessons.

It Creates a Stressful Environment

Think about this scenario (which is a reality for millions of businesses). It is the start of a new month, you have dozens of different bills due valued thousands, payroll which you cannot miss, supplies that are needed for daily operations, and the money you have in the bank is nowhere near the amount required to cover these expenses. You are in a continuous squabble with collectors calling your phone by the minute. What do you do? The answer to that question is simple, get depressed. Let us face it, finding working capital is not as easy as it sounds in the movies or on when you are in such a situation. When you cannot take care of your expenses it creates a stressful environment for everyone. The entrepreneur, employees, vendors, lenders, and everyone involved are all pulled into a web of misery, frustration and worry that seems endless. Sales are stagnant, marketing dollars are nil, enthusiasm is at a low, focus is absent. All of these elements construct a culture that limits a company’s potential.


It Limits a Company’s Potential

As I have mentioned in a previous article entitled “The Young Entrepreneur Has Nothing to Lose”, not every business owner will be able to get a $100 million investment from a venture capitalist or a $1,000,000 line of credit from the bank. Majority of businesses have to scoop by day-by-day to make the company able to stay afloat. All of this wasted energy and time on sourcing working capital, worrying and a lack of cash on hand can spell disaster for the less adept entrepreneur. When working capital is limited, projects and growth plans are put on hold or cancelled completely; and this can mean loss of market share, loss of customers, a decrease in brand reach and loyalty, a decline in company moral, a torrid relationship between the business and its creditors and worst of all, failure. No business ever wants to be in a cash crunch because not only does it mean delaying bills but it also contributes to a long, drawn out haul of cashless quarters and a literal scraping of the bucket to make ends meet. The oxymoron of the working capital dilemma is somewhat amusing though, as it can be the perfect breeding ground for amazing success.

It Teaches You Valuable Life-Long Lessons

It is a well-known story that triumph mostly comes from a place of adversity. When you are at your lowest is the time you are motivated to be more creative, more resilient, dedicated and driven. These attributes leads to ideas, which leads to creativity, innovation and eventually meaningful ways in which your business can be transformed. The working capital crunch is always a bitch, it leaves a long line of victims in its wake and many symptoms, but when the entrepreneur learns to combat this disease, everything is smooth sailing thereafter. Lessons learnt today prepares us for the future and the battle of cash flow is one from which we can learn life lessons that will help us not only in our businesses but every aspect of our lives. Misery loves company, and when we give in to the demon of no working capital we are giving in to misery, depression, failure and stagnation.

When your business hits a road block such as a cash crunch, it is time to assess everything. The entrepreneur needs to look into location, product quality, marketing, word of mouth, your employees, your website, your reputation on social media, and so much more. The working capital crunch is a bitch but it provides room for thought, action and defensiveness. It is never the place to be complacent, submissive, ignorant, disappointed and play victim. Instead, the entrepreneur should come up with workable ideas that will bring their business from zero to infinity.

What are your thoughts on working capital?

Posted by:Dave Anthony

I am a Jamaican born Entrepreneur living in the United States. Adventurous, writer, weird, down to earth. Here I write about interesting stuff that educates, thrills and influences.

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