Taking Risks

Any new business incurs initial costs, almost always ahead of being able to make sales or earn money.

Those costs can be set up costs, materials for stock and wages for staff. The seed capital has to be found and of course, if the business is unsuccessful it will be lost.

Even the production of a well thought out and thorough business plan does not alleviate the potential of failure. 

The first milestone is for the business to be self-sustainable. Our survey asked how those initial costs were funded;

64% replied from their own money. Family and friends was the next highest at 16%.

This analysis shows that 4 out of every 5 new businesses are started with owner’s capital.

Given that soe businesses started inadequately funded and possibly borrowed small amounts of money to start it is not surprising so many fail from a lack of funds to get through the first 6 months, let alone the first year.

This proves the gap in the market for seed funding for the entrepreneur and reluctance to back new business. Is there a role for the government to take such a risk?

It has happened in the last few years of the last century but failed.