A beginner’s guide to testing your financial plan

test financial plan

According to Bloomberg’s infamous, mythical study, 8 out of 10 businesses fail in their first 18 months.

The Bloomberg figure has been shown to be nonsense, but business failure statistics given by other sources still report business closure rates of 20-40% within the first 2 years of trading, which is still a very high failure rate.

In this article, I’m going to explore one of the ways to avoid the financial pitfalls many businesses find themselves in. I’m going to talk about not just having a financial plan – but understanding the discipline of testing it.

There are myriad reasons why such a large proportion of businesses don’t succeed, but for small businesses cash flow problems are one of the most common reasons. There are practical ways to stave off cash flow problems – but much better if they can be avoided in the first place. (more…)