When you start a business, you are optimistic that you will succeed. The reality of owning a small business is that money is usually scarce and costs are high. The customers you want are probably being served by others and you need to convince them to do business with you.

These are three powerful money actions for business success.

Start without debt. It is difficult enough starting a business with all of its costs, but adding principal and interest payments can severely reduce your chance of success. Putting away cash for the costs of the first year increases your chance of success. This is the most important money action you do.

You need to know the numbers. You must know your cash flow numbers, your gross profit numbers, your expense numbers and the price you need to charge to cover these numbers and give you the profit. You can’t make good decisions in business if you can’t make good decisions about numbers, and you can’t do this unless you understand them.

It is hard to get a small business loan. They are hard to get because of all the preparation that is required. There is a list of qualifications to meet, such as equity requirements, collateral, business plans, profit and cash flow projections. Many people don’t even bother to try because they can’t meet the requirements and don’t want to go through the effort. Those who succeed are the select few who receive the benefit.

Those who have failed in small business will tell you that their failure was caused by not enough cash, not being able to borrow more money, customers wouldn’t buy, the IRS was unreasonable.

The underlying reason is deficiency of knowledge and not being prepared for these events.

Cash reserves and knowledge go a long way in preventing business failure.

Spurrier is president of M Spurrier Financial Planning LLC and can be reached at (585) 271-5280. This column is written by members of the Rochester Women’s Network (rwn.org).