How quickly will it take your business to start generating surplus cash? Or is it going to be cash hungry and if so, for how long? Investors will concern themselves with funding the growth of the business. Do your customers expect to get credit in your sector, and what would be typical; do you have to hold substantial stocks to meet your customers’ needs; and are there big seasonal fluctuations? Will you be able to get credit from your suppliers or will you have to pay cash with order? Will the business require a substantial period of brand building via expensive (but sometimes crucial) traditional media advertising to reach its intended market, and will it always require investment in that area to grow? All of these questions and more are directly linked to the dreaded but very common ‘over trading’, where a business grows too fast to generate sufficient cash to fund said growth. Investors are very wary of ‘over trading’, as it invariably leads to further ‘cash calls’ and inevitable feelings of ‘throwing good money after bad’. Investors, therefore, are very keen on good cash flow and on a business’s ability to generate the vital cash needed to fund its future.
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