From the course: Finance Essentials for Small Business
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Insufficient capital
From the course: Finance Essentials for Small Business
Insufficient capital
- Let's begin with the money needed to start a business. Too many new businesses start their business without enough capital. They just don't have enough money in the bank to support them while their cash flows get up to speed. It turns out that the rent has to be paid, the utilities have to be paid, equipment may need to be purchased or rented, the employees have to be paid, inventory has to be purchased. All of your expenses have to be paid while you're waiting for potential customers, first, to find you, and then second, to pay you. There's often a lag between when you get paid for providing a good or service and when you have to pay your vendors, and, generally, that lag is not in your favor. Also, when starting a business it takes time for your customers to find you and for you to get your sales and marketing efforts up to full speed. During that time, your expenses will continue to need to be paid. It would be…
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