Capital for Small Businesses


Published: March 2, 2020

Courtesy of successdigesdigestonline

The lack of capital can be Fatal to Small Businesses!

We all know that running a small business is not for the faint of heart; I know personally

for I am an entrepreneur myself. My name is Dr. Donald E. Mitchell, D.B.A., M.B.A.-Marketing, B.B.A.-Marketing, and have been an entrepreneur for over 40-years. Investopedia, in its article written by Melissa Horton, updated Aug 12, 2019, states the lack of capital is the far most reason why small businesses fail. More than 50% of small business owners say the lack of Capital or Working Capital draws a direct correlation to business failure. Moreover, much of this can be related to the 2008 Financial crisis, where banks tighten their lending to small business organizations.

In most cases, it is not that the small business owner is not aware of the day-to-day operational cost to run a small business; it is the disconnect between sales needed to cover this gap from the lack of capital or Working Capital. This disconnect puts the small business owner at risk of failure. Then there are the lowering prices to induce new customers to lift Working Capital; this can be a fatal marketing concept due to if done too long will drive the small business further down the failure trail due to having even more limited capital due to this new pricing strategy.

Consequently, smaller startup new business needs fresh new capital to bring about products and services to bring to the marketplace, nevertheless capital markets are not following suit in this area of financing due to low sales volume or the prospect of the higher amount in the future. It is imperative of entrepreneurs, or small business owner reach down into their coffers and produce more capital to place into their businesses, for it they don’t plow capita resources into their businesses why should other? The business owners should research other forums of financial links where they, after doing their research, will be able to contact these financial institutions sometime shortly to obtain this financing for their projects.

Inadequate Management

The Small Business Association says 80% of small businesses fail due to deficient management. This lack of business acumen comes from the management team or the owner/manager. In most cases, the only senior management person in the company within the first year or two is the owner/manager. Although the manager may have the skillset to sell and operate the business, they are missing the minds of others that can help with the operation. Then again, the manager must outsource difficult tasks that are not familiar with or do not have the skillsets to make it happen; they must be contracted out to other, more capable individuals or teams.

                                         Ineffective Business Plan

Annette Haag (2013) adaptation of how to write a successful business plan is one of the reasons how I got my idea in writing my dissertation on why so many entrepreneurs or small business people failed due to not writing a business plan and following it. She went on to state that two-thirst of small businesses will go out of business within five-years due to not implementing this tool in the business arsenal of how-too. Now think of it this way if we were to find a way to reduce this failure rate, this would increase our current economy, develop more jobs within our communities, and pride to our American workers.

A sound business plan is a road map to what the entrepreneur should do for a better chance of success. Without it, there is nothing but disaster ahead. Not knowing the current trends or which ones competitors are or the market as a whole are all things the small business owner would want to know to stay ahead of the game and have a more favorable chance at success in the new venture.

Conclusion

So, in the end, the end of raising Working Capital is still paramount to entrepreneurs and small business owners. As a Doctorate of Business Administration in Entrepreneurship and Business Management, it is my duty to find solutions to various business problems and solve them as a practitioner in business management. My agency has developed a partnership with a direct lender that has a desire to lend to entrepreneurs and small businesses. They can have the company approved in 24-hours and funding out to them within 3-business days. So call us at (866) 400-3040 or go to our website to learn more at www.donaldemitchell.com.

So until next week, keep looking to do better business and marketing.