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Why startup venture capital applications fail?
But not everyone can get this. They have to adhere to strict guidelines and procedures to be able to be qualified with the venture capital. To make sure that you will be qualified for this, you have to ensure that the application would not have loopholes even before you come up with a business.
Reasons behind failure
If you are planning to start your own business, aside from the "building blocks" you also have to be aware why do businesses usually fail. Why? It is also because of these reasons why the venture capitalist would not invest on your company or your projects.
If you really want your business to succeed you would have to understand and know what are the things makes a business fail to make your own achieve success. Here is a short list of the most common fatal mistakes of business owners of new businesses why their startup venture capital are usually rejected:
- Inadequate planning of the business. Every new business needs good conceptualization and planning. Planning is the backbone of any business; carefully planned a business can succeed without too many problems.
- Insufficient initial capital for start-up period and development stages due to inadequate planning Most of the time a small business fails even before the actual operational stage because of lack of funds, this happens because of the lack of plans and the inability to execute the plans within the schedule and within the parameters. Sometimes budget scheduling is overlooked during the planning stage.
- Mistaken estimate of market demand for product or service. One of the saddest stories that one would ever hear from a budding entrepreneur is the story of the new miracle product that could change the world and that nobody wanted. Some people easily fall victim to get rich quick schemes that they over estimate the marketability of a product or a service. Be sure that you do your homework before getting into anything.
- Lack of management ability. Lack of experiencing in managing people, resources and time can also play a big factor in the success and or failure of any business.
- Failures to select and use appropriate outside professional advisors. Sometimes even small businesses need professional help, seeking the advice of an expert will have long term effects on your business.
- Inability to market product or services effectively. Introducing your product or service to the public is a must for them to know you are selling something.
- Over dependence on a single individual or on a predicted specific event. Sometimes people are just lucky to get that one big break but not everybody is as lucky as the others.
- Failure to understand capital requirements of a growing business. A growing business needs progressive funds.
- Poor timing of expenditures due to poor planning. Bad compliance to the budgeting schedule leads to making unnecessary purchases that could be very hurtful to your company's growth.
- Expedient rather than reasoned decision-making. Experts say the startup venture capital requests are rejected because the business owners need more than guts and instincts—most of the time calculated risks are what a business needs.
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