Dangerous success

This entrepreneur's lament is one of the great ironies of the marketplace. What his advisors are saying is that capitalization is insufficient to support sales growth. Believe it or not, it is actually possible to succeed yourself right out of business.

Capital comes from three sources: investment equity, loan proceeds and profits. Working capital also includes cash flow. The steps you take to capitalize your business are critical, but your understanding of cash flow, the relationship between accounts receivable days and accounts payable days, is essential.

When a small business owners gains this cash flow understanding, it's an "ah-ha" moment that will answer your "how is this possible" question.

For small businesses, sustained growth cannot happen without understanding and monitoring the relationship between accounts receivable days and accounts payable days very closely. Failing to do so is how to succeed yourself right out of business.