It's Time to Debunk the Business Myth

A business enterprise requires various components to administer the business

By
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Setting up a business requires endless hard work, a plethora of zeal, and an eagle’s eye to scrutinize ever-changing business industry.  A concise and faultless business plan is not sufficed to administer the business. An entrepreneur has to overcome challenges, avoid pitfalls and lastly, pass through trials and tribulations to stay upright in the industry. In the course, the entrepreneur certainly heeds to prevalent myths which often decrease the morale and later, directly affects the work. One such widely prevalent business myth is: Investors seek the best companies for the investment.   

Shutterstock

Startup companies grapple a lot in the initial years of the entrepreneurial journey. As the startup companies start earning steady profits, they tend to stabilize the business and reduce the risk factor involved.  IBEF’s report states, “India’s GDP is estimated to have increased 6.6 per cent in 2017-18 and is expected to grow 7.3 per cent in 2018-19. During the first half of 2018-19, GDP (at constant 2011-12 prices) grew by 7.6 per cent. India has retained its position as the third largest startup base in the world with over 4,750 technology startups, with about 1,400 new start-ups being founded in 2016, according to a report by NASSCOM.”

Common Business Myths In The Ecosystem  

While ascertaining the investors in the business ecosystem, companies learn about misperceptions that have hugely embedded in the industry. First of all, investing in bulk has deemed a thoughtless decision as the newly established firm is perceived to sustain on the finances in the first five years. Actually, operations, overhead and marketing are contingent on capital investment.

Thus, it has been wrongly perceived that a startup company can topple anytime in the beginning years. On the ground, a business organization needs much more than the capital. It requires a foolproof business outline, thorough business analysis, and experienced chunk of professionals.    

Business Essentials To Ascertain The Right Investors

Approaching the investors is less intimidating than impressing them by the business plan. The data-driven era facilitates people to make thoughtful decisions. Thus, similar to the folks, the investors examine the business’s scope, productivity and various other factors. After blending the strands together, then an investment decision is taken.

Nowadays, investors seek organizations which have higher growth prospects. Such startup companies grow faster and later, catch the attention of the larger companies for acquisition. Therefore, investing in good startups is highly significant for investors.

Secondly, the investors seek the organizations which are upwardly scalable. Herein, the organizations need to emphasis on increasing manpower than technological advancement as the manpower testifies a company’s reputation and gives better services to the common masses. Nonetheless, the company assets depreciate after a span while the employees gain expertise by polishing their skills.

To persuade the investors, the startup companies should manifest a perfect image of the business. For startup investors, the company’s image matters the most than any other factor.   

Long-Term Investment Is Not A Well-Chosen Decision

Startup investors prefer startup companies which possess fair chances of acceleration in the future. These types of companies are certainly procured by the larger companies and thus, investors are easily paid off their endowed money. At present, investors abstain endowing money in the projects for a considerable time. Reliance on the dividends is not an imperative deal anymore.

Conversely, a company, which grows relentlessly without taking enormous debts, can easily afloat the business. In this scenario, the particular company certainly denies the authoritative companies to overpower it. This stature is significantly appreciated in the ecosystem but the veteran investors plan to sell off their assets, once they obtain equable invested returns.

Small startups should recognize this approach and accordingly, seek investors. Further, they should plan out their future so as to meet the sudden financial, operational or other relatable stumbles.

This article was originally published by Jaspreet Kaur.