cashflow problems

• What is the focus of the lesson on cash flow problems?

  Issues arising from cash surplus or deficit
• Why is cash flow vital for businesses?

  It is a leading cause of business failures
• What percentage of small businesses fail in their first year?

  One in five
• What fraction of small businesses survive a decade?

  One-third
• What does a cash surplus indicate for a business?

  It earns more than necessary for operations
• What is a potential consequence of having a large cash surplus?

  Opportunity costs from idle money
• How can a cash surplus lead to inefficient practices?

  Managers may become complacent
• What expectations might stakeholders have regarding a cash surplus?

  Funds should be reinvested or distributed
• What is a cash deficit?

  Spending more than is earned consistently
• What problems arise from a cash deficit?

  Struggles to pay suppliers and employees
• How does a cash deficit affect payroll?

  Risks losing valuable staff members
• What lifestyle impact can a cash deficit have on business owners?

  Severely impacts their personal income
• How does a cash deficit stunt a company's growth?

  No room for investment in technology
• What is a potential solution some businesses consider for cash deficits?

  Taking loans to cover expenses
• What is a downside of taking loans during a cash deficit?

  Increases liabilities due to repayments
• What might a company be forced to do in dire financial situations?

  Downsize or sell assets
• What is the ultimate risk of being in a cash deficit?

  Leads to business folding
• What are the key differences between cash surplus and cash deficit?

  • Cash Surplus:
  • Earns more than necessary
  • Can lead to opportunity costs
  • May cause inefficiencies and misaligned expectations

  
  

  • Cash Deficit:
  • Spends more than earned
  • Causes supply chain disruptions
  • Risks employee dissatisfaction and business failure