Tesla is Now Asking Suppliers for Cash Back, Here’s How to Avoid that Scenario

Tesla is back in the news. Headlines proclaim the electric car manufacturer actually approached some of its suppliers, requesting cash back in an effort to realize profitability. Elon Musk quickly reacted to the reports. Now, it’s a he-said-she-said storyline. But, that’s just another fight the media will happily play up for clicks and tune-ins. The reality is Tesla is not a profitable company. Even though it enjoys so much buzz and customer loyalty, it can’t turn a profit.

The Top Reason Small Businesses Fail

The company reportedly burned through $1 billion in a quarter. And, it’s promised to bring its expenditure to under $3 billion this year. That, after it went through $3.4 billion last year. Not to mention, it lost $710 million in Q1 of this year alone.

Just as good cash flow keeps a business afloat, poor cash flow can sink it. In fact, poor cash flow is a big reason why one in every four businesses doesn’t make it past the first year. And why more than half don’t survive past the fifth. —Fresh Books.com

It gets worse. The company might not reach a stock conversion price of $560.64. Which means it will have to shell out $230 million to obtain a convertible bond in November. Its stock fell by nearly 4.5 percent just in the last twelve months and continues to struggle.

This is an important lesson to those who’d like to start a small business because it’s one of the main reasons startups fail in the first place: inadequate cash flow and reserves. Problems with cash is typically the reason small businesses fail.

Top Small Business Cash-Flow Mistakes to Avoid

So, if cash is the biggest reason new companies fail, then how do they actually get into such a pickle? Well, it’s not just avoiding bad business ideas (although that’s certainly helpful), it’s more about being smart with money in the first place:

  • Impulse spending. We all know retailers embrace this practice. But, it’s far too easy to fall into the trap of impulse spending, particularly during the startup phase. It’s also a shortcut to failure because it’s the ultimately lack of responsible cash management.
  • Past-due receivable apathy. When cash is rolling in, it’s very easy to let an invoice or two or more slide. After all, there’s plenty of money coming in, so why bother? It’s important to stay on top of receivables because it sends the wrong signal when you become apathetic. Plus, you might be able to put that money to good use in the future.
  • Not sticking to a real budget. You wouldn’t spend more money that’s in your personal bank account. However, when it comes to business finances, too many owners just don’t adhere to a realistic and strict budget. And, that’s a recipe for failure.
  • Failure to put some cash aside. Feast or famine. That’s an old cliché but it’s entirely true for many businesses. That reality means it’s best to have some cash on-hand when needed because it’s very likely that time will come.

What other ways do small business mishandle cash? What other advice would you give about maintaining positive cash-flow? Please share your thoughts and experiences!

Interested in learning more about business? Then just visit Waters Business Consulting Group.

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.elementor-widget-text-editor{font-family:var( –e-global-typography-text-font-family ), Sans-serif;font-weight:var( –e-global-typography-text-font-weight );color:var( –e-global-color-text );}.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:var( –e-global-color-primary );}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap, .elementor-widget-text-editor.elementor-drop-cap-view-default .elementor-drop-cap{color:var( –e-global-color-primary );border-color:var( –e-global-color-primary );} Warren Wheat wasn’t new to landscape maintenance — he’d already built and sold one company in the industry before the entrepreneurial itch brought him back in 2012 with Genesis Landscape Solutions. What started as a request for help writing better commercial proposals turned into something much bigger. “Since hiring John and his team three years ago, our company has experienced more than 3X growth. During that same period, our profit margins have also risen significantly,” Warren says. “John is an extremely well-rounded consultant that has the ability to adapt and customize his approach in order to fit the specific needs of your business… As the President of a company with over 120 employees, I genuinely appreciate the partnership we have formed with John.” From a Better Proposal to a Bigger Question Warren originally reached out to Waters Business Consulting Group for help putting together a more comprehensive, professional proposal he could submit for large commercial maintenance opportunities. That work naturally expanded into a website overhaul and refined marketing to support a more cohesive brand. But partway through, Warren admitted something bigger: he knew he was at or near capacity in the business’s current state. A sharper proposal and a better-looking website were great, but they didn’t solve the real question — how could the organization actually grow and move to the next level? That reframe pointed to deeper gaps: the business needed a clearer understanding of its current model and what was driving top-line revenue and margins, a real roadmap of growth objectives, and the organizational infrastructure to support scale. That meant building out organizational structure, hiring high-caliber talent to form a cohesive team, and continuing to sharpen marketing across proposals, website, and presentations. Building the Infrastructure for Scale Waters Business Consulting Group worked with Warren’s leadership team to rebuild the business model around its highest revenue-generating services and activities, collaborating with outside experts on web design and the new professional proposal that had started the engagement. The team helped build a more balanced portfolio of work to support profitable growth, and analyzed direct costs closely to protect and improve margins as the business scaled. Just as important was the human side of scaling: key stakeholders were brought into meetings to increase buy-in and develop leadership within the organization, and a formal organization chart prioritized hiring for the roles the business actually needed, with clear operational responsibilities and KPIs tied to compensation. The employee recruiting and onboarding process was refined to consistently find the right people to support growing properties and workflow. The Results — and What’s Next The changes gave Warren something he hadn’t had before: a predictable business model that let him see where the company was heading proactively instead of reacting to whatever came up. Clear processes and procedures with real accountability metrics replaced guesswork, the team gained a shared understanding of goals and revenue targets, and direct costs and overhead came under real control through internal tracking systems. Leadership strengthened at the upper levels of management — all of which supports the more than 3x growth and rising profit margins Warren describes over the engagement. The work continues, too, with new technology for weekly property reporting and GPS employee time tracking, a more proactive recruiting and retention strategy, a refined and more profitable irrigation division, formal career tracks and compensation plans for key positions, an updated policy and procedure manual, and a new CRM solution to improve customer retention alongside ongoing leadership development training. If your business has outgrown its current systems but you’re not sure what infrastructure to build next, that’s exactly the kind of scaling challenge Waters Business Consulting Group helps owners solve. Schedule a free consultation to map out what’s holding your growth back. Contact Waters Business Consulting Group

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