Codie Sanchez says most businesses fail from cash flow problems, not bad ideas. Three fixes: get paid before you deliver, build recurring revenue, and keep no single customer above 15% of your income.
The number one reason businesses fail? Cash flow problems. Here's three ways to make that not happen to you. Remember this framework, Cash flow versus cash suck. First is get paid first, then provide your service. Don't provide the service and then pay. The difference is if you own a landscape business, you want to get the money before you mow the lawn. That's oddly kind of rare. It's a recipe for disaster if you have to then collect payments and people don't pay you. The second is reoccurring revenue. Get one client to pay you continuously over time. Most small businesses do not have subscription models. They do have multi month and multi year payment models. You are going to be different because that makes your life a lot harder. Three is a diversified client base. If you have one to 10 big clients and you lose a few, you're in trouble when they leave. My rule is no single customer makes up more than 15% of the revenue of any business. So get paid first, make reoccurring revenue. Diversify your client base. That's how you build a business. It's a cash flow business, not a cash suck business.
He wouldn't give you the dream if he didn't believe you had what it takes. You have what it takes.
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