Many small businesses fail because of failure to manage their finances. The common traps are overextension of financing and poor management of cashflow.
Many businesses do not have the working capital to finance expansion or even the running costs of their business. Businesses may need to obtain debt or equity finance.
However small businesses often fall into the trap of over-extending themselves by not planning adequately for their financial needs and not obtaining the finance that would best suit their business needs.
For example, overextending themselves with hire purchase and leasing commitments. Highly geared businesses come under greater financial pressure when economic or business conditions weaken.
Visit this website for tips on how to manage your business finance David Koch Small Business Matters . Watch the video to learn more about how to manage cashflow.