By Jennifer Farnsworth
The best advice Paul Dowen, a managing partner of Whittemore, Dowen and Ricciardelli, LLP in Queensbury, can give to business owners is pretty simple: Have cash.
Dowen said the number one thing he tells small business owners, or those looking to open a small business is have enough cash in a reserve.
“I tell people just starting up—hoard your cash, be prepared,” said Dowen.
Dowen said when starting a business, people should not be undercapitalized. They need to figure out how quickly cash can be generated. He recommended having enough cash to live on for three months, so that until a person can be solvent before collecting the first paycheck as a small business owner.
“If you don’t have that, then it is best to wait on the startup,”said Dowen.
For current business owners, he gives similar advice. He warns against purchasing things that won’t help generate a cash flow. Most banks are happy to finance equipment for small business owners, especially items that will enhance the business and generate more equity.
Dowen also advises to have a business plan in writing to serve as a guide to short- and long-term goals. It should be a clear plan that addresses sources of income and the demographics of target customers. Businesses need to know who they are marketing to, because it will greatly affect cash flow.
“That is how you will grow and make money. Ninety five percent of businesses fail because of cash flow,” said Dowen.
Dowen recommended using marketing tools like social media to tap into potential customers. Once that research is done, look to find ways to finance the business. Save as much as possible and make sure the venture can afford to lose money if things don’t go as planned.