5/22/2017

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The Lack Of Startup Capital

Money is needed for office and warehouse space, furniture, utilities, inventory, equipment, salaries and other necessities.

When starting a business, you should think about putting together a plan of action before you get started. Your plan should include any and everything that will help insure the success of your company.

Insufficient capital is the common denominator for most business failures, especially upstarts. Money, or the lack of it, is one of the most important aspects of any business. The importance of startup capital cannot be understated. It it vital to the success of any business, even those that have been around for a while, and without a source of capital, the outlook for success is bleak.

Entrepreneurs want to succeed but they don't always calculate their short and long term budget before opening shop. This can lead to unexpected road blocks and become a nightmare in terms of future financial stability.

In reality, they underestimate the amount of money needed to get started and how much they should have in reserve as a safety net just in case a positive income doesn't materialize as fast as anticipated.

They also don't know how to correctly calculate projected growth, positive or negative, or add in months, or years, of either breaking even or having to deal with a negative cash flow until the business can sustain itself.

Many entrepreneurs end up spending money from other sources to support their businesses and help keep them afloat. This infusion of cash may come from savings, the sale of real property and/or other valuables, or it may come from the income of a spouse who is working a regular job.

An unrealistic expectation of incoming revenues from sales and/or services is not what you want when beginning a business venture. What you do want is to know, with a reasonable degree of accuracy, that there will be enough income to keep the business up and running.

Unless your business takes off as soon as you start it, and some do, it is a good idea to research and learn business economics. You should admit to yourself that it may take a while, maybe a year or longer before your business start generating a positive cash flow.

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