why over funding can kill a startup
Did you know that one of the leading sources of failed start ups is overfunding?
In the start up world,funding is often equated to success. But often times it is simply a case of correlation and not causation! Of course a lot of successful companies are also well funded, but their success is not solely because of their access to capital.
There is a popular saying that “you cannot fund your way through a broken business model”
What makes a business thrive is it’s
1ï¸âƒ£value proposition
2ï¸âƒ£revenue generation
3ï¸âƒ£cost minimization.
If these things are not in check, all your business can do is delay the inevitable.
As a new business owner, there is a lot you get the opportunity to learn when you have little or no access to capital. It forces you to be creative, to take calculated risks, and to manage the little funds you have effectively.
It will mean that when you eventually scale. There will be a reliable business process in place that is tried and tested.
On the flip side, if your business starts with so much capital, you might not be forced to be so creative with marketing campaigns and internal processes, as the available cash offers an added safety.
Funding will not fix a bad business model.
Funding will not fix a weak value proposition.
Funding cannot reverse a bad marketing strategy.
No matter how little you have, you can take a step forward every day. Create/ add value, and funds to scale will come in.
Read also : Why small business(startups) fail .
Author : Kekeocha Justin
