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Five Common Finance and Accounting Problems of Start-Up Companies

Author

Listed:
  • Derrald Stice

    (HKU Business School, University of Hong Kong, Hong Kong, China)

  • Earl K. Stice

    (Marriott School of Business, Brigham Young University, Provo, USA)

  • James D. Stice

    (Marriott School of Business, Brigham Young University, Provo, USA)

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.

Suggested Citation

  • Derrald Stice & Earl K. Stice & James D. Stice, 2023. "Five Common Finance and Accounting Problems of Start-Up Companies," Journal of Economic Analysis, Anser Press, vol. 2(2), pages 70-77, April.
    • Handle: RePEc:bba:j00001:v:2:y:2023:i:2:p:70-77:d:38
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    References listed on IDEAS

    as
    1. Derrald Stice & Earl K. Stice & James D. Stice, 2017. "Cash Flow Problems Can Kill Profitable Companies," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 8(6), pages 46-54, September.
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    Cited by:

    1. Hao, Xiaoli & Wen, Shufang & Li, Ke & Wu, Junwei & Wu, Haitao & Hao, Yu, 2023. "Environmental governance, executive incentive, and enterprise performance: Evidence from Chinese mineral enterprises," Resources Policy, Elsevier, vol. 85(PA).
    2. Hou, Kaiyuan & Qammar, Rabia & Zhu, Conghao & Usman, Muhammad & Abbas, Shujaat, 2023. "Testing the resources curse hypothesis: Unleashing the role of national governance and financial development in OPEC countries," Resources Policy, Elsevier, vol. 86(PB).

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