In this post, Roland from In Business shares some valuable advice about how to manage your finances, an area that many business owners struggle to succeed in.

Every business large or small has to be good at managing its finances if it is to succeed. Many very good businesses with a great product and customer service has failed because of failing to give proper attention to the management of its finances.

A typical way in which this can happen is when a business really grows very quickly.

Imagine this scenario. You are producing a fantastic product that suddenly everyone seems to want. Orders are pouring in every day. Large chains of supermarkets are banging on your door asking if they can buy from you.

Now what would happen if you now ordered the materials to produce enough stock. You increase the staff you employ and buy or rent a larger factory. Your outgoings are going through the roof but you think no need to worry as you have those orders! However suppose that those orders are delivered and those lovely supermarkets decide to take a few months to pay you? Your suppliers are now demanding payment and they possibly stop selling you the raw materials you need. Your successful business is now in serious trouble even with a full order book. This scenario has happened many times in the real world and businesses have grown too fast without adequate capital.

If those business owners and managers had not let their hearts rule their heads they would have looked at the accounts and created accurate cash flow forecasts and quite likely grown the business more slowly and selected the companies that they would supply to carefully with a view to a long term stable relationship.

One great piece of advice that many have been given over the years is ‘start small and grow big’. Growing is a slow process not one that happens overnight. Let your business build its capital base and never gamble that some bank or other institution will bale you out on the strength of orders if you run out of cash. Cash is King!

Although it may appear boring financial planning, forecasts, and accounting are the things that will hold your business together and prevent you from failing when you could have succeeded.

Roland Millward is a mortgage broker based in Trowbridge, Wiltshire. He blogs about business at In Business which is one blog you should check regulary! Roland is an amazing person to know, he never stops doing his best, follow him on twitter through @RolandMillward.