“Leadership practices and cash flow management are two factors that greatly impact a

company's success or failure.” Companies that have strong management and can maintain
positive cash flows are more likely to survive than those that cannot. An organization's
survival rate can be increased by decision-makers allocating more time and money to hiring,
retaining, and developing skilled managers, as well as creating efficient cash flow
management procedures. A company's success can be influenced by its managers, and a
company's failure can be influenced by its managers. Misreading customer preferences,
failing to adapt to market changes, or ineffectively managing employees are just a few
examples of the many factors that contribute to ineffective leadership. Some leaders fail to
understand that what worked in the past might not work going forward. These leaders
frequently become accustomed to their current approaches and do not develop fresh
approaches to address changes in the industry. (Johnson, n.d.)

A corporation's cash flow is another important factor that has an impact on its ability
to survive. (Johnson, n.d.) The movement of money into and out of a business is known as
cash flow. Cash spent indicates outflows, and cash received indicates inflows. (Hayes, 2022)
There may occasionally be a discrepancy between a company's net income and its cash on
hand. Due to the difficulty in meeting its obligations when the majority of a profitable
company's cash is invested in assets, it may eventually fail. The methods used by a company
to manage its cash flow determine its long-term success. When the economy is strong, many
businesses begin to lax their cash management guidelines, which can put them in danger in a
weak economy. (Johnson, n.d.)

The main objective of businesses is to maximize profit. Profit maximization is a process

that businesses go through to make sure the best levels of output and prices are realized in
order to maximize their returns. It can be difficult to run a business, especially when it comes to
turning a profit. And the truth is that if your business is not consistently making a profit, it will
eventually close, even if you have the best products and services to offer and respectable sales
as well. Instead, the most effective and successful companies on the market are frequently
those making large profits. A business that generates a respectable amount of profit can also
easily gain a better reputation in the marketplace, draw in more clients, and entice investors to
provide much-needed funding, all of which contribute to the continued growth of the company.
(Gupta, 2022)

Therefore, it would not be incorrect to state that generating a profit that is high
enough to support a company's growth and long-term survival in the market should be its
main objective. As a general rule of thumb, "a 5% is a low margin, 10% is a healthy margin,
and 20% is a high margin," even though profit margin varies from industry to industry. (Gupta,
2022) Unfortunately, it frequently happens for businesses to cease operations in the first few
years of operation. This could be the case for a start-up or even an established company that
entered a new market. And a big part of that has to do with not being able to make enough
money.

It has been observed that occasionally business owners struggle to comprehend the
fundamentals of effective product pricing, which ultimately prevents profits from being
generated. According to the theory, if you set your product prices too low, more people may
approach you to purchase your goods, but the price you set may be so low that you are hardly
able to turn a profit. In contrast, if you set your prices too high, fewer people will buy your
products because they are unaffordable, which will again result in little profit for you. The key
is to carefully consider your margins and then price your product accordingly. (Gupta, 2022)

The level of market competition is another issue that is crucial in lowering your profits.
Sometimes, even when the prices are reasonable, the profits are reduced because there is
too much rivalry already in place. However, you can get around this by branding yourself
more effectively than your rivals or developing a differentiating strategy that could make you
stand out from the crowd. Additionally, you should strongly consider engaging in competitor
benchmarking analysis to find your rivals and regularly track their business practices. (Gupta,
2022)

Additionally, it's possible that you are omitting the relative business expenses like rent,
raw materials, and labor increases because they all inevitably reduce the profit. For instance,
you might be spending too much money on a large office space that isn't necessarily
necessary, or you might have hired staff that isn't necessary. Simply put, this indicates that
you must reduce any overhead expenses because they will seriously hurt your finances.
Besides that, you must account for all potential future hidden costs, such as increases in labor
costs, insurance premiums, tax obligations, and even recurring expenses like utility costs, in
order to avoid having to reduce your profits in order to cover them. (Gupta, 2022)

Making profit generates cash flow. However, the actual increase in cash over a given
time frame is almost always either lower or higher than the profit figure. These examples show
how cash flow and profit are related. First off, the cash flow amounts for the period are rarely
the same as the revenue and expense figures in the P&L (profit and loss) report for the period.
Second, increases in accounts receivable and inventory are followed by decreases in accounts
payable and accrued expenses payable as actions that reduce cash flow. Third, actions that
improve cash flow include cutting back on inventory and accounts receivable while boosting
accounts payable and accrued expenses payable. Last but not least, neither depreciation nor
amortization expenses are cash outlays in the period in which they are incurred; unusual losses
recorded in the period may instead be write-downs of assets or write-ups of liabilities. (Tracy &
Tracy, 2016)