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Fatal Flaws

Red flags that make potential financing sources think twice

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This story appears in the November 1996 issue of Entrepreneur. Subscribe »

Of the 800,000 or so new businesses that are formed each year, investment banker Robert Shuey of La Jolla Securities Corp. in Dallas says only a tiny fraction successfully raise outside capital.

A quick look at certain benchmarks would seem to bear this out. For instance, last year there were about 700 initial public offerings (IPOs)--a goodly number, but not when compared to the number of start-ups.

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