Importance of Finance For Entrepreneurs At Startups
Entrepreneurs
need Capital at startups or at its initial stage to operate and run the
business successfully. If the Entrepreneurs have enough capital to operate the
business, they do not need to worry about raising funds. But, if they have
limited amount of capital, then they need to raise funds to operate the
business successfully.
An Entrepreneur needs capital to survive and its business for the long period of time. So, it is very essential for the survival and existence of the new venture / entrepreneur.
There are three main reasons due to
which most Entrepreneurs / Ventures need funds at startups of the business.
1. Cash Flow
Challenges
2. Capital Investments
3. Long Product
Development Cycles
You may also be interested in Financial Management in An Entrepreneur
1. Cash Flow
Challenges
When business grows or expands, new
Entrepreneurs require sufficient amount of Cash In Hand. During This Stage,
expenses and incomes play a vital role in this regard because if the expenses
are utilized wisely and properly, then income will be increased and ultimately
the firm can compete the cash flow challenges easily.
Eventhough, a new entrepreneur has
good quality products and satisfied and loyal customers, but due to lack of
inadequate amount of Cash In Hand, the entrepreneur will fail at the end
because the new ventures can not maintain the quality of products and satisfy
the customers due to inadequate resources required to maintain quality of
products and retain the loyal customers.
If the entrepreneurs have sufficient
amount of Cash In Hand, then he / she can buy quality equipments, hire
qualified staff to maintain the quality of products and ultimately can satisfy and
retain the customers by providing Good Customer Care Facilities, Free Home
Delivery, Promo Codes, Discount Coupons, etc.
2. Capital Investments
If the business is established
physically, then the entrepreneurs need huge capital investments for
constructing Office Buildings, Office Equipments, Plant & Machinery and other
investments projects to carry on the business.
If the business is established
virtually, then is very less amount of capital is required, like buying domains
and web hostings, buying premium themes, Hiring SEO Experts, etc.
3. Long Product
Development Cycles
Some products have long life
development cycles. The life cycle may consist of 2 years or 14 years and that
is the longest life cycle of any industry. Games and Bio-Tec Industries are the
best examples that contain products having lengthy product development cycles.
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