Business 101:

See, of all the reasons businesses fail (and there are plenty of reasons—bad location, down economy, lack of leadership, etc.), insufficient or poorly managed capital is the one that seems to appear on every financial guru's bullet-pointed "Why Businesses Fail" list. It's the second entry on the Small Business Administration's (SBA) reasons for small-business failure, and as such it's likely a major contributor to the alarmingly low success rate of startups (18 percent, according to a Harvard Business School study) and small businesses over the last few years.