Most profitable small businesses today are the small business owners who watch their bottom line every day.

They do their cash flow sheets every night at the close of business and chart their progress. When you are a small business entrepreneur, the most important thing becomes cash flow. Without having money coming into a small business it can go under very fast.

Small business entrepreneurs need to have a hefty bank account or a well-heeled financial backer to take on any new and previously not tried, business venture. This is where it is essential to have a good business venture partner if the instigator or developer of the system or product, does not have the cash available to take on and invest in a project alone.

New business ideas are cash hungry. If something is new and previously untested, the amount of money needed to manufacture or produce a product, is horrendously expensive. It is a constant money drain so there needs to be an initial cash flow however small it is. Initial cash flow into a product is an indicator for the success of that product into a new market.

To find where the real market for a product exists becomes another expense that money has to be available for to find and build-up. Finding a market for a new product or service is expensive to trial and advertising these days is very expensive. Labour is costly and needs to be covered if you are putting ‘feet on the ground’ to canvass a likely market.

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If you are thinking of being the ‘feet on the ground’ yourself to canvas a potential market, you will still need cash to cover this expense because your living costs have to be covered too.

The “fair Work Act” under Australian law, describes a small business  as any privately owned Company, Partnership, or Sole Trader, who has a relatively low volume of sales and employs less than 15 people. The Fair Work Act in Australia was only recently brought into law in 2009.

Being an entrepreneur in any business venture is risking money that can be easily lost. There are statistics that show that 1 in 5 small businesses will go out of business within 3 years of starting. Many will fail within the first twelve months due to being undercapitalised.

Undercapitalisation is one of the biggest reasons given for entrepreneur small business failure in Australia. This is why the most profitable small businesses are those business owners who watch their bottom line on a daily basis.