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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Hey, Entrepreneurs, If You Want to Succeed, Stop Seeking Advice from People Who’ve Failed

Everyone has an opinion. But, everyone can’t be right. There’s always a set of best practices and then there are ways to do things that fall short of success or lead to bad outcomes. So, this is why people seek advice from their family and friends when they want to start a small business. The trouble with this approach is that the people the entrepreneur is speaking to may not be the owner of a profitable small business. While it’s certainly understandable to seek advice from people you trust, that doesn’t necessarily mean they’re the best or only sources. Remember, Real Friends are Supportive Here’s another problem. There are a lot of individuals around you who will tell you that you can’t do it. Usually, this is based on fear, but can also manifest from those who are envious that you’re willing to take a risk to improve your life and be professionally successful. Then, there may even be people around you who went into business for themselves, but it didn’t work out. Ask business owners who specialize in the same niche as your startup if they have any tips. Business owners in your market know about accountants, lawyers, and recruiters who might be a good fit for your needs. They can make recommendations and point you in the right direction. —Entrepreneur.com While the reason that their businesses failed might not be direct to their own decisions, it’s generally a safe bet. Even if it was circumstances beyond their control, successful business owners are the ones who find a way through tough times, endure, and come out on the other side. To put it much more plainly, if you’re seeking advice from people who have failed in their own business ventures, you’re speaking to the wrong people, unless they have gone on to succeed in other ventures by learning from their failures. Failures can be the precursor to success if we learn from them. Best Places to Seek Business Advice Fortunately, there are a few places you can go to get reliable, actionable advice about starting your own business. Here are the best places to seek entrepreneurial advice that will help you get started in the right direction: Successful individuals in the industry. Sure, this sounds all too obvious. But, a lot of people who want to go into business for themselves are fearful of speaking with people that are already successful in the industry. Now, that sounds strange, but it makes sense if you think about it in a different way. Those who avoid successful individuals in the industry into which they want to enter, typically don’t want to give up their plans – which is to say their strategies and secrets. So, they make the mistake of being protective of their ideas, without knowing if said ideas are actually good or bad. Small business development groups. There are small business development groups that can help you get some of the logistics worked out and even provide a little friendly advice that you may not have thought of on your own. But, here again, you must be willing to share your ideas with others. Doing so will allow other people to gauge your ideas and their merit. Local industry trade associations. These industry trade associations exist to promote their industry, which is their sole purpose. You’ll learn a lot about the industry, and perhaps your own niche, along with some tricks of the trade and how your competition deals with its challenges. Of course, it’s just as wise to consult someone who specializes in starting and growing small businesses. An experienced business consultant and coach brings a wealth of information and is someone who can not only provide valuable input but also be supportive. Where else do you recommend people starting a small business seek advice? Please take a few minutes to share your thoughts and experiences so others can benefit from your perspective! Interested in learning more about business? Then just visit Waters Business Consulting Group.

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Being an entrepreneur means being able to pursue a dream, to fulfill a passion, and to realize your full potential. It’s also a stressful role, even for the most intelligent and resourceful. Though we like to think of stress as just an inconvenient emotion, it can take a substantial toll on your health. It’s linked to heart disease, obesity, depression, headaches, gastrointestinal problems, and more adverse health conditions. It’s also one of the most common conditions in starting a new venture or continuing to build a business. However, it doesn’t have to get the best of you. Stress Points Entrepreneurs should Avoid Stress is actually a biological response to certain conditions and situations. It consists of releasing hormones, including adrenaline and cortisol, which cause the body to physically and emotionally respond to its environment. In an entrepreneurial role, you’ll have a lot invested, which can include your personal savings, time, and effort. What’s more, you’ll be responsible for managing others. That’s certainly conducive to causing stress and you need to be equipped with the right response to make the right decisions. In the business world, there’s a certain cache attached to being able to soak up all that stress. But people can’t keep putting themselves under a lot of pressure for a long time without consequences. Eventually something’s going to give. —Entrepreneur.com When you’re an employee, you deal with stress but it rises to a whole other level when you are running your own business. After all, it is you that’s “calling the shots,” and you are at the helm of the enterprise. Stop to think about the entire situation and it can be practically paralyzing. You’ll definitely have a lot to deal with when you’re running or starting a business and one of the single biggest challenges to overcome is how you deal with stress. Because of this, you should know the most common stress points and how to cope with them effectively: Capital. Money is essential to business, but there will definitely be times when cash flow is anemic. You should learn to use free and low cost resources when money is lean. For instance, you can pay a freelancer that’s just starting out, or, can take-on a little more personally to keep costs down. Promises. As a business owner, you’ll make promises on a regular basis. When an unexpected event takes shape, it can seriously throw-off your working timeline. When possible, you should rearrange your schedule and revisit your priorities to make good on your promises. Commitments. Alongside promises are your commitments. When starting or running a business, it’s often tempting to fully load your schedule to help build your brand. This can take its toll, so, think about what’s most important and only commit to these. Clients. While clients are the lifeblood of your business, early on, you’ll probably take anyone who comes across your radar. Over the course of running your business, it’s helpful to reexamine which clients are worth the effort and which are making your journey an agonizing proposition. Talent retention. Having talented people on your team is key to success but this comes with a cost. Said cost rises as time goes on and you’ll face one or more moving-on sooner or later. Instead of fretting over the loss, look at it as an opportunity to forge a strategic partnership. Though these are all real and can be large problems, one stress point is particularly painful: the unknown. As the saying goes, “you don’t know what you don’t know.” That however, is true with just about everything in life. Instead of letting it worry you, look at it as a new opportunity to embrace. Even if you fail at this or that, it serves as a lesson learned which helps to make you a better leader. Remember, we learn far more from our failures than our successes because it’s easier to deconstruct. Want to find out about what a business coach can do for you? [shareaholic app=”follow_buttons” id=”26833294″]

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