It believes that the number of small- and medium- enterprises that don’t have a well thought-out and adhered-to cashflow plan is a significant factor that leads to 80% of small businesses failing within two years.
Successive surveys carried out by Palo Alto over the last decade show that survival and profit-making often depend on how well you plan your business and to what extent you stick to the plan, particularly in the early years.
“The key to cashflow is planning. Working with a plan, businesses can manage cash flow more economically by knowing ahead of time what their cash needs are, so that they can provision for cash.
Without a plan, businesses can get caught up in cash needs whether or not they are profitable in their accounting,” believes Tim Berry, founder and president of Palo Alto software.