Question

Why is it so difficult to raise the capital needed to start, operate, or expand their ventures?

Answer 1

Q: Why is it so difficult to raise the capital needed to start, operate, or expand their ventures?

Yes, the statement is absolutely correct that when a company wants to raise the capital for start, operate or expand the Business, its difficult to get capital. There are three important stages of the business and we would try to understand why every business doesn't get funds from the market.

Difficulty/Challenges in Raising Capital for Business

• Stage 1 Startup
• Stage 2 Operating
• Stage 3 Expanding/Growth

1. Startup Stage

The startup stage is the stage of the business where a new businessman wants capital for starting and marketing the goods and services. Which help to establish the business in the competitive market but there are lots of reason every startup business does not get capital easily from the market.

• High Risk in New Business
• No Goodwill and Guaranty
• Competitive Market
• High Operating Cost
• Less Trust on New Business
• No Profit only Expenses

2. Operating Stage

The operating stage is the stage of Business in which business is old in the market but need funds to operate the business daily activity. But it's not easy to process to get working capital for the running business. There lots of reasons to fail to get the capital form the market. That will help us to better understanding it.

• Financial History
• Market instability
• No Brand Value of the Business
• High Competitive Market
• Management Issue

3. Expaising Stage

Expansion stage is the stage of Business in which the company wants to increase its business and open more manufacturing center to increase profit for the Business which help to improve & capture the market. It's not easy to get a large fund from the market.

• High Risk  
• Less cash Flow
• Govt. Rule and regulations
• Market Activity
• High Fixed Cost of Buisness
• Brand Value
• Lack of Customer Share.

In short, we can say that there are lots of reasons businesses not get capital some are mentioned above for our better understanding. Today is a very competitive world and its difficult to trust on someone business concept. Brand Value and Customer Base help us to get more capital easily. Instability of Government Rules and Technology creates difficulty to collect funds.