The Common Challenges Faced By Startups while Seeking Funds
Prateek Agarwal is a renowned international motivational speaker and leadership trainer. He has been working towards empowering Indian businesses by sharing management solutions to all sorts of SME and MSME, especially in tier-2 cities in India by simple and workable scientific tools
A start-up is a like a baby that calls for extra care and mindful handling to let it grow into a successful and healthy unit. If you think that having a rock-solid business idea is enough for the start-ups to survive, you are going wrong. In order to sustain, a start-up needs a balanced flow of resources in the form of money which is crucially required in the initial stages. Also, it calls for timely scrutiny and management of sections for a brighter future. As per a research, 20 percent of the start-ups fail in the very first year and 50 percent in the 5th year, the reason being the irregular flow of cash funding. This piece of information explores the key ingredients that spice up the initial years of a startup and leads to failure:
Acquiring Funds
For any new business, the most important and primary thing is to do the pre-planning. And the first step in pre-planning calls for acquiring funds. For this, one can either look for loan or credit, which totally depends on the path your wish to go on and make the best out of it.
Poor Cash Flow
Before we understand the after effect of poor cash flow in a business, it is important to know what cash flow. A cash flow is a real or virtual movement of money in the running of a business. The basic formula to estimate the cash flow is the total income minus total expenses. If the cash flow comes out to be positive it shows you have liquidity and have profitability position. And, if the cash flow comes out to be negative it means an alarming situation for the business. Poor cash flow is an after effect of bad financial planning, where one fails to foresee the short term expenses and end up in financial crisis.
Misbalance of Sales & Profit
It often happens that you are doing endless sale but the profit margin is less. This might be because of miscellaneous expenses that are never registered, but affect the balance sheet every month. This calls for controlling such expenses and adopt the following measures.
• Adopt good purchase policy
• Review the expenses on regular intervals and define the purchases
• Regularly review or supervise the business policies
• Choose your vendors wisely and go through the old agreements
• Poor financial control
Final Words
It is important to understand that a startup is a fragile unit of development that calls for extra care and analysis to make it a fruitful and successful enterprise in future. All this calls for time to time analysis of policies and finance and adopt remedies. It is rightly said that success cannot be achieved overnight, and every business faces numerous challenges before it becomes a popular brand.
A start-up is a like a baby that calls for extra care and mindful handling to let it grow into a successful and healthy unit. If you think that having a rock-solid business idea is enough for the start-ups to survive, you are going wrong. In order to sustain, a start-up needs a balanced flow of resources in the form of money which is crucially required in the initial stages. Also, it calls for timely scrutiny and management of sections for a brighter future. As per a research, 20 percent of the start-ups fail in the very first year and 50 percent in the 5th year, the reason being the irregular flow of cash funding. This piece of information explores the key ingredients that spice up the initial years of a startup and leads to failure:
Acquiring Funds
For any new business, the most important and primary thing is to do the pre-planning. And the first step in pre-planning calls for acquiring funds. For this, one can either look for loan or credit, which totally depends on the path your wish to go on and make the best out of it.
A start-up is a like a baby that calls for extra care and mindful handling to let it grow into a successful and healthy unit
Poor Cash Flow
Before we understand the after effect of poor cash flow in a business, it is important to know what cash flow. A cash flow is a real or virtual movement of money in the running of a business. The basic formula to estimate the cash flow is the total income minus total expenses. If the cash flow comes out to be positive it shows you have liquidity and have profitability position. And, if the cash flow comes out to be negative it means an alarming situation for the business. Poor cash flow is an after effect of bad financial planning, where one fails to foresee the short term expenses and end up in financial crisis.
Misbalance of Sales & Profit
It often happens that you are doing endless sale but the profit margin is less. This might be because of miscellaneous expenses that are never registered, but affect the balance sheet every month. This calls for controlling such expenses and adopt the following measures.
• Adopt good purchase policy
• Review the expenses on regular intervals and define the purchases
• Regularly review or supervise the business policies
• Choose your vendors wisely and go through the old agreements
• Poor financial control
Final Words
It is important to understand that a startup is a fragile unit of development that calls for extra care and analysis to make it a fruitful and successful enterprise in future. All this calls for time to time analysis of policies and finance and adopt remedies. It is rightly said that success cannot be achieved overnight, and every business faces numerous challenges before it becomes a popular brand.
