08 Sep Obstacles of Starting a Business: Capital

There are many reasons not to start a business. The obstacles are numerous and monumental. However, you aren’t starting a business to hear all the reasons that it won’t work. You want to find the way that will. You want to laugh in the face of all those who never believed you could do it. However, being properly educated about the challenges that lie in front of you is one of the most important things, if you are to succeed in your goals. This series will give you some information and hopefully enlighten you on how to succeed on the road ahead.

Capital

At the backbone of every business is a solid amount of capital. Capital is essentially the energy that keeps your company alive. Run out of it, and your business will surely die. It is the duty of the entrepreneur to raise capital in order to jump start a company, and then to also ensure a steady amount of cash flow to keep it going. One of the most logistically challenging obstacles on the road to starting a business is gathering the initial capital to get going. Here’s some things to think about, regarding capital…

Other people’s money

Unless you have a good deal of personal wealth that you’ve either inherited or already accumulated, you’re going to want to pursue investors to start your business. Typically, and there are exceptions, you don’t ever want to use your own money. That is the basis of our system we call capitalism, using the money of other people (usually referred to as “capitalists”). While there may certainly be times that you need to use some of your personal funds to get through a tough time, putting your own money into the company can leave you with a lot of liability, or put you into a financial situation that can be hard to recover from.

Keep costs low

One of the biggest challenges of starting a business is to keep costs low, while not cheapening your services. You essentially want to spend as little as possible, but still deliver a good, nay, an amazing product. To do this, you want to cut out all unnecessary expenses that aren’t adding any real benefit to your business. One important aspect of this practice is to never over produce on your product. That is one of quickest ways to waste money. This can be one gigantic tightrope walk for any business. After your initial startup, though, your first goal should be to establish a steady cash flow so that you will always be above water.

In closing

Be sure to know your expenses to the cent, and be smart with your company’s money. It may seem overwhelming at first, but knowledge is your best ally. Moving your business beyond the initial capital recovery phase is a huge victory!

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