Being able to anticipate the capital needed to carry out work in the business is of crucial importance.
If you are short of capital to carry out your plans it can be terminal to your business. Cash crisis is often a killer of new businesses.
Obviously, there are many reasons why a company runs short of cash, but one
reason can be that the entrepreneur has not been able to raise enough funds to
meet the actual financial requirements arising after the setting up.
This problem is avoided by securing that your business is injected enough capital to meet its requirements.
The two most frequent reasons that a company is undercapitalised are:
Generally, limiting expenses or saving money is not advisable as this also
limits the firms activities and ability to progress.
Thus, you must anticipate the necessary costs of realising your concept and you should not doubt the necessity of such scheduled costs.
Oftentimes, getting things up and running takes longer than anticipated.
Starting up as an entrepreneur, you first have to gain a competitive profile,
call attention to your existence and your competencies, convince customers of
your expertise, and implement a
This is time-consuming - VERY time consuming! If you think it will take six months to get sufficient customers you should multiply this by at least two, just to be on the safe side.
Therefore, it is important that you have enough capital to stand up to the hard and financially sluggish initial period. You can take this penetration phase into account in your budgets by budgeting pessimistically or set forth a worst-case-scenario.
Its purpose is to identify the worst possible situation for your company
(slower sales than anticipated or non-existent sales) and try to estimate the
cost of such a situation.
The essence of business start-up funding is to inject the required capital into your business. This allows you to dispose and act in anticipation of unforeseen events to prevent such events from inhibiting the operations and growth of your company.
If you have more money than brains you should focus on outbound marketing. If you have more brains than money, you should focus on inbound marketing.
- Guy Kawasaki, Author of The Art of the Start