A critical requirement for the success of a micro or small enterprise is that it should be able to generate positive cash flows at all times, but this is often poorly understood by entrepreneurs. The paucity of business skills extends to the proper use of finance.
If an entrepreneur is to contract a loan to finance his or her business, it is essential that the entrepreneur understands clearly how the finance will be used to add value to the business, so that he or she will be able to service the loan in full and also increase the profits of the business.