Pitfalls in Financial Planning of Start-ups

Start-up Companies
Knowledge Center

 

Next Topic

Start-up Companies > Best Practices

Paula Kokare, Project Manager, Switzerland
Poor financial management and planning during the initial stages of start-ups' operations may cause underperformance or even failure. Dunn and Cheatham (1993) identified several factors, which are characteristic to overall poor financial planning by small and start-up businesses along their development stages:
  1. LACK OF INITIAL FINANCIAL RESOURCES: Many entrepreneurs fail to match maturities (durations) of long-term investments in assets to appropriate long-term sources of financing. Similarly, the need for long-term investments to finance basic current assets and inventories is often underestimated by new ventures.
  2. LACK OF SURVIVAL CASH: Entrepreneurs tend to raise just enough cash to open up the business and start the operations. They do not necessarily take into account foreseeable cash requirements from the business by anticipating future events.
  3. FAILURE TO ANTICIPATE GROWTH: Due to optimistic attitude of entrepreneurs, business growth is seen as necess (...) Read more? Sign up for free

Please register now to read all responses and to join this discussion yourself. It's easy and 100% free.

Sign up for free     Log in


 
More on Start-up Companies
Summary
Forum
🔥Genchi Gembatsu - Go Out and Talk to Customers
4 Sources of Sustainable Growth and 3 Engines of Growth for Startups
The Three A's of Metrics for Validated Learning of Lean Startups
Best Practices
🥇Strategy for Start-ups: The Entrepreneurial Strategy Compass
🥈5 Development Stages of Small Businesses and Start-ups (Churchill and Lewis)
🥉Creating the Foundation for a Later Success Culture in Start-ups
Pitfalls in Financial Planning of Start-ups
The 4 Main Tensions in Start-ups
Why Start-ups Prefer Short-term, Internal Financing
Heavy Competition is Beneficial for Startups
Start-Ups Must Be Socially Beneficial
Life Cycle of New Venture. Growth and Transitions
Special Interest Group Leader

Are you an expert in Start-up Companies? Sign up for free


Start-up Companies
Knowledge Center

 

Next Topic



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2020 12manage - The Executive Fast Track. V15.6 - Last updated: 28-9-2020. All names of their owners.