Five Common Finance and Accounting Problems of Start-Up Companies

Derrald Stice; Earl K. Stice; James D. Stice

doi:10.58567/jea02020005

Authors

Derrald Stice HKU Business School, University of Hong Kong, Hong Kong, China https://orcid.org/0000-0002-2376-173X
Earl K. Stice Marriott School of Business, Brigham Young University, Provo, USA
James D. Stice Marriott School of Business, Brigham Young University, Provo, USA

DOI:

https://doi.org/10.58567/jea02020005

Keywords:

Start-ups, Cash Flows, Sales Growth, Product Pricing, Internal Controls

Abstract

You have a product or service for which the world has been waiting. You've scraped together enough cash to get your idea off the ground. You are confident that your business will succeed. And yet, it is often the case that a short time later you are out of business. Numbers from the U.S. Bureau of Labor Statistics indicate that about half of new businesses fail within the first five years. And with those business failures go the life savings and the dreams of the person who started the business. This article describes five finance and accounting pitfalls that should be avoided in order to increase the likelihood that a small business will succeed. Of course, the most common reason for a small business to fail is that customers don't want the product or service. But small businesses are also often killed because of predictable and preventable finance and accounting mistakes: insufficient capital, poor cash management, poor record keeping and controls, improper product pricing, and uncontrolled growth.

Author Biographies

Earl K. Stice, Marriott School of Business, Brigham Young University, Provo, USA

PricewaterhouseCoopers Professor of Accounting, Marriott School of Business, Brigham Young University

James D. Stice, Marriott School of Business, Brigham Young University, Provo, USA

Steve Albrecht Professor of Accounting, Marriott School of Business, Brigham Young University

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Stice, D., Stice, E., and Stice, J. (2017). Cash Flow Problems Can Kill Profitable Companies. International Journal of Business Administration 8(6): 46-54. https://doi.org/10.5430/ijba.v8n6p46.