Small Business Failures in America - Cash Flow Issues

We are noticing an increase in the length of time it takes Large corporations to pay on their invoices to our team. Fortune 500s are tending to pay their vendors more slowly, which will hurt the already strapped small businesses in America. These same small businesses employ 2/3 the population and do a great service in supplying the needs of corporations.

At the company I run, The Car Wash Guys, has retail and fleet customers. Retail pay cash, which tends to offset the problems with the extended late payments from fleet accounts. It appears that the corporations are conserving their cash to keep earning up until the next quarter, however this will hurt their long term efforts in that the small businesses who provided real time services and parts will not be able to meet the real time demand and therefore cause cost overruns for the Manufacturing sectors. Therefore decreasing productivity and causing a problem with their efficiency efforts. Who will be hurt worst? Likely high tech non able to perform on time for their industries, and their stockholders in decreased valuations of stocks, which do not hit their earnings guestimatation or quotas. Also hurt will be the retail outlets who need items in the store on time to meet consumer demand. The biggest hurt in the long haul will be all of us in America due to increased small business failures of those operating on a shoe string.

Some of these weak small businesses should be weeded out thru abnormal free market factors such as this slow pay and others who are just working to hit ROIs and pay off loans will be hurt. This hurts interest rates because risk adverse banks stop lending to small businesses. It hurts SBA guaranteed loan programs and that affects all of us. It is serious and will most likely lead to unnecessary laying off of people who make up the largest percentage of American working people. Small businesses represent 2/3 of all American Workers. It think this problem will get worse as CFO look for ways to keep cash as long as possible, by stringing out their receivables. Phone companies, electric companies and other bills must be paid on time by the small businesses, whereas theses companies are notorious for slow pay in tough economic times. It seems to be the little guy who gets it in the shorts, such is life and an acceptable given, yet it also effects us as our customer base is decreasing.

What about the labor and layoffs? As small businesses are unable to employ the lion share of the masses, there will be fewer with money to spend on those items sold by larger corporations.

How does this occur and how are small businesses losing? Slow pay means slow payment of bills and adverse credit scores. Also the 60 days of cash flow in the bank will be used in the float. That float some small businesses can absorb, but some small businesses will be beaten down and become inefficient and cannot last that 60 days and neither can most of the nearly 28 million small businesses in this country that pay their bills, buy products and services and feed the families of their workers.

This is the most serious problem facing the US economy and it is still moving in the wrong direction as of first quarter 2001. This is not good. Historically Car Washing tracks the new car sales markets, so our particular company should be fine. Also as any small business will tell you they must be constantly adapting their methods of operations to those forces, which might be a threat.

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs

In The News:

Hahira hosts Small Business Saturday  Valdosta Daily Times
Kutztown businesses connect for Small Business Saturday  Boyertown Berk Montgomery Newspapers
Photos: G7 Small Business Market  Vanderhoof Omineca Express
Best Places to Work [Small Companies]  New York Business Journal

FTC Franchise Rule if Enacted will Trigger Hardship for Private Sector

The FTC Franchise Rule maybe changed, as the Federal trade... Read More

Creative Business Card Marketing

Announcements can be handed out as a business cardAnnouncements can... Read More

Franchise Buyers from Hell

I ran a franchise company for many years, a car... Read More

Small Business Stress Buster: Completion not Perfection

Completion not Perfection Five Keys To Doubling Your Productivity and... Read More

Five Quick Ways to Speed Up Cash Flow

At one point or another, almost every business runs short... Read More

Small Business Spoiler - Procrastination

One of the most common issues that comes up for... Read More

Successfully Adding a Service To Your Business

There will come a time in your business where you... Read More

Why are Reverse Mergers Often the Victims of Short Sellers?

There is a great deal of abuse going on in... Read More

Is Your Business Property Safe and Secure?

Security Professionals provide the products and services necessary to create... Read More

You Dont Yet Know What You Dont Know

Someone new to business ownership recently told me, "Before I... Read More

Low Cost or Highly Funded Start Up

Many new ventures are preoccupied with all the money they... Read More

Are You Making These Mistakes In Your Business?

You've probably heard the statistic that 95% of small businesses... Read More

Why Small Business Must Turn to PR

If small business had no important outside audiences, it wouldn't... Read More

Franchise Rule to be Revised; Why?

The FTC, Federal Trade Commission, is considering modifying the franchise... Read More

Street Wars Between Mobile Car Washers and Mobile Auto Detailers

There is much competition in the mobile auto detailing business.... Read More

The Responsibility Conundrum - Where art Thou?

Mr/Ms, 'not me' is often on holidays in your business.... Read More

Top 10 Lessons for Small Business Success - As learned From My Twin 3 Year Olds

Small business success is very similar to learning to walk,... Read More

How to Create an Information Plan

What is in an information plan?Before you even meet with... Read More

What is your Motto?

Company mottos can easily be printed on a business card.Sometimes... Read More

Should I Franchise or Not?

A reader of one of my online sessions asked should... Read More

Find Your Niche & Follow It - Part 1

In this series of articles I'm going to show you... Read More

Slip And Fall Professionals; Service Businesses

Since you own a business you probably have liability insurance... Read More

Pressure Washing Business; Steam Cleaner Fuel Maintenance

It is essential that you fully understand how the fuel... Read More

11 Things Small Business Owners Can Learn From The Miracle On Ice

1. Know Where You're Going ? Coach Herb Brooks had... Read More

Motorcycle Detailing Procedures Manual Sample Outline

If you are a motorcycle detailer and need to expand... Read More