The stats can feel brutal: about 1 in 5 businesses don’t make it past their first year. Nearly half shut down within five. And by year ten, two-thirds have closed their doors.
But here’s what those numbers don’t tell you: most failures aren’t about bad ideas or tough competition. They’re about money management. In fact, 82% of small businesses fail because of cash flow problems.
That means success isn’t only about how much you sell—it’s about whether you can pay the bills, make payroll, and still have something left to grow with. The good news? Cash flow can be managed. And businesses that get this right are the ones that beat the odds.
Five Financial Fundamentals Every Business Owner Needs
After decades of working with Wichita businesses, we’ve seen the same core practices make the difference between struggling and thriving.
- Know Your Numbers Cold
If you can’t measure it, you can’t manage it. Every owner should know:
- Break-even point – how much revenue it takes to cover all costs.
- Cash conversion cycle – how long it takes to turn inventory or services into cash.
- Operating expenses – fixed and variable costs down to the penny.
- Profit margins – not just overall, but per product or service line.
- Build a Cash Reserve—Before You Need It
Banks don’t want to lend to a business in panic mode. Build a reserve when things are steady. Even setting aside 2–3% of revenue each month adds up fast. Aim for 3–6 months of operating expenses so a slow month or unexpected hit doesn’t take you down.
- Master Forecasting
Forecasting isn’t about being psychic, it’s about planning for “what if.” Ask:
- What if sales drop 20%?
- What if my biggest customer leaves?
- What if I land a huge contract? Can I afford to fulfill it?
A strong forecast gives you options before you’re in a corner.
- Categorize and Control Spending
Not every expense is equal. Break them into:
- Essential fixed costs – rent, core salaries, insurance.
- Essential variable costs – materials, supplies tied to production.
- Growth investments – marketing, new hires, equipment.
- Nice-to-haves – perks, upgrades, non-essentials.
When cash gets tight, you’ll know what to cut without hurting the heart of your business.
- Get Proactive Help
Too many owners say their accountant only tells them what already went wrong. That’s reactive. Proactive financial support helps you spot issues before they become disasters, shifting you from scrambling to steering.
Ready to Beat the Odds?
Don’t wait for a cash flow crisis to think about financial strategy. Our team specializes in helping Wichita businesses build the financial foundations for long-term success. Schedule a consultation today to review your numbers, identify vulnerabilities, and create a plan that puts you in the successful minority.
