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3 ways to avoid undercapitalization

Avoid losing necessary funds by planning ahead and presenting a strong image to investors.

You are here: Home / Small Business Tips / 3 ways to avoid undercapitalization

December 14, 2015 by boardmember1 Leave a Comment

Starting out with a coherent plan will help owners see their venture through.

For small businesses, undercapitalization means being unable to secure enough funds to function. It’s a serious concern for younger businesses especially, given the existing challenges of establishing a business to begin with. Starting out with a coherent plan for budgeting and developing the business will help owners see their new venture through.

Ohio entrepreneurs in particular have local resources to help them meet funding difficulties and keep their growth rates up during difficult times. Maintaining a high profit margin can require both outside help and good internal policies: Although undercapitalization can be common enough, here are some basic tips for getting off to a strong start.

  • Maintain a strong customer base: Whether it’s damage control after a crisis or simply investing in good customer service, paying attention to concerns may help increase retention and prevent dramatic revenue plunges.
  • Make use of Small Business Administration (SBA) resources: The SBA released a resource guide this year specifically pinpointing issues that Ohio business owners might face. Among other things, this document draws attention to the various types of entrepreneurs, including those of different ethnic groups and who choose to work out of their homes. Employers may qualify for different programs without realizing it.
  • Present a strong case to investors: As this AllBusiness article notes, confident, coherent plans for business growth can be more persuasive when courting lenders. Owners should frame their far-reaching goals to seem more like sure decisions when investors consider them for funding. The same article also recommends choosing an industry that makes sense for each owner to capitalize on existing experience and knowledge.

Growth Capital will help Ohio businesses solve issues specific to their business and location. Contact us for more information.

Small Business Tips business lending,  business loans,  ohio funding,  small business funding,  undercapitalization

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