The number 1 reason most start-ups fail – and how to avoid it

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Photo: Getty
Photo: Getty

According to the University of the Western Cape, South Africa has a higher start-up failure rate – 70-80% of small businesses fail in the first five years – than elsewhere in the world. Cash flow is key to keeping businesses afloat - here's how to ensure that your business does not run out of money.

In 2021, the top reason that start-ups failed was because they ran out of cash. Managing your cash flow correctly could help you grow your business, while failing to do so could end your entrepreneurship journey rather abruptly.

Cash flow is how much money you have flowing into your business, and how much money you have flowing out. The concept may be simple, but the reality is that maintaining a healthy cash flow is one of the hardest challenges you’ll face as an entrepreneur.

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