Yeah you heard me when you’re an entrepreneur and business owner the more money you have access to the less problems you’re going to have with the business. The reason I say this it inherent in the beginning stages of any business that complications and/or unexpected situations are going to show up it’s how you deal with them that makes the difference if you’re going to succeed or not.
There’s a whole number of reasons why small businesses close.
According to a 2015 study by Bureau of Labor Statistics, the biggest reason why businesses fail is a lack of sufficient capital plus cash flow problems. In fact, 82% of business failed because they experienced cash flow problems. This statistic reiterates the often overlooked fact: Small businesses need capital to grow.
According to Michael Gerber, who wrote the E-Myth, 96% of start-ups fail inside of 10 years. This is also validated by Neil Patel and a latest Silicon Valley survey of 90% of all Startups Fail!! They surveyed 101 of Silicon Valley founders whose businesses failed and they came up with the top 20 reasons why.
Sure, enough other than 42% thought it was no market need the second main issue was 29% claimed they RAN OUT OF CASH! Add that to another 8% said No Financing/Investor Interest was the reason and you get a whopping 37% of the reason the business failed was Lack of Capital.
Let that sink in for a second. That is a huge number and frankly, this topic of need more Capital truly needs to be in the forefront of every conversation of the CEO/Founder deals with on a daily basis period! If you don’t have enough capital you will lose and most likely go under.
In a nutshell, if you’re starting a business you need capital to succeed and if you don’t then you fall into the danger zone of never being able to fulfill your vision.
It’s very simple the More Money you have Access to the Less Problems you will face.
When is the right time to raise capital?
You should always be aware of additional funding while your business is growing. There should always be a plan in place to acquire funding as your business thrives. Always have room to grow in life and business. The more funding you have available the less stress and chance you have of going out of business. Life is always easier when you have an abundance rather than not enough.
This is where most business owners and entrepreneurs made the mistake of thinking money was always going to be made available when you need it. Which isn’t so. Remember when the money dried up in 2008 and 2009 when no one was lending money?
I remember seeing very successful businesses fall apart when banks were cutting lines of credit to limit their risk and no one was investing because they were in fear of not knowing what was going to happen to the financial system.
Learn from the past, your peers and make sure you’re well capitalized for those sudden drastic twists and turns you will experience when being an entrepreneur.
Always be an active seeker of finding the right amount of funding for your business and looking ahead to see what pitfalls lie ahead that you can avoid only if you have enough funds available to you.
More Money Less Problems Mindset starts with YOU.