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Common financial challenges faced by young business owners

Common financial challenges faced by young business owners

Posted on: May 27, 2014
Author: Joan Chisholm, ATB Financial Relationship Manager

ATB Relationship ng business owners, there are a few common questions that come up. If you are thinking of starting...


Alberta's entrepreneurial spirit goes back decades—and, based on what I see in my role at ATB, that spirit isn't fading anytime soon. Young entrepreneurs are some of the most vibrant and inspiring business owners that I meet, and I'm honoured that I get to help them achieve their dreams.

Working with young business owners, there are a few common questions that come up. If you are thinking of starting your own business or are in the early stages of running your business, anticipating these issues up-front may help you avoid some headaches.

Ineffective cash management

Ineffective cash management is probably the most common challenge faced by young business owners or people taking over a family business. Even if a business is making a profit, you still have to manage the money coming in. You should be aware of the delays that occur between the time you collect receivables and the time you have to pay your payables. The way to identify this cash management problem is to know exactly what has to be paid out and what you are expecting to take in.

Ineffective cash management is the result of the absence of a strategy or plan. From start-up to finish, your business should always have a plan. With a plan in place, you can create strategies that help you increase cash flow and profitability. As bankers, we want to see that owners have a business plan which helps them create a strategy for present and future. Planning ahead helps you anticipate your financing needs and arrange suitable funding.

Lack of financing

The lack of financing can be a serious problem for business owners. Whether you are using investors to raise money or obtaining bank financing, underestimating your cash needs is an issue. You should determine how much money you need and determine your financing options.

Understanding financial statements

Finally, understanding financial statements is vital for the business owner. All too often, the business owner relies on their accountant or bookkeeper to interpret the numbers. This creates limitations for owners as they do not know the story behind the numbers. ATB offers an excellent two-day course called Real Cash Real Profit which helps business owners interpret the financials and critical ratios that aid in their success and growth.