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Business failure – insufficiency of funds

Date: 08/15/2006 | Category: Business | Author: arvind

When a small business is started, the major discussion outside the small business owner’s circle hovers around one point – when this business will close down? General perception about small businesses is that more than half will close down within an year or two. While this failure rate is debatable, the reality may not be much different from this perception. 

I have seen many small businesses failing within first two years of operations due to one major reason – insufficient funds. Small business owners have a general tendency to expect higher revenues that real ones, and lower expenditure> Reality however is different – expenditure usually shoot through the budgets and revenues are far lower than expectations. 

I have also been witness to small business failing due to limited resources and / or improper deployment of funds. When the ray of hope looks brighter towards the end of the tunnel, the business closes down. This happens due to the fact that the required funds are not available at the right time for right deployment.

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