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Wrong Reasons to Accept Investment for Startup

wrong reasons to accept investment for startup
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STARTUP

Wrong Reasons to Accept Investment for Startup

It’s a common belief among many of us that investors are an important requirement of entrepreneurs for running their businesses in a well – efficient manner. However, according to a report by Entrepreneur.com, most of the businesses are started without any kind of outside investment. Moreover, startups are mostly undermined because of too much money. Nowadays, the process of venturing into entrepreneurship is very easy as numerous easy procedures including ecommerce services, smartphone apps, etc. are available. But even after that many entrepreneurs adhere to bootstrapping techniques. But they do not think about the fact it definitely increases commitment but it reduces the cash needs.

There are many instances where it is seen that some entrepreneurs are being targeted or even dominated by investors which ultimately hamper their business. Let us now look at some of the wrong reasons to accept investment:

  • Investment on infrastructures: Some entrepreneurs are of the view that having an attractive or upscale infrastructure will help them attract clients and customers. They think that it is a crucial element in growing one’s business. But the main thing is that it is not the infrastructure but the products and services that matter in any business. That is why infrastructure costs are definitely not required to be covered under outside investments.
  • Self – investment: If an entrepreneur does not have their own savings or any other financial sources then investors mostly take them for granted and even question their commitments. So, that is a very wrong reason to accept an investment and most of the intellectuals will definitely agree to this point.
  • Hiring staff: Those entrepreneurs who are well – versed with the pros and cons of business, they definitely know how to get people engaged through the medium of barter system or agreement on sharing revenues and profit. They definitely do not pressurize themselves about hiring salaried staff nor do they find any reason to accept investments for the same purpose.
  • Marketing and campaign: Almost every startup has the requirement for marketing and campaigning. But definitely does not require investments especially in today’s world where numerous strategies like email marketing, SEO platforms, etc. are available for promoting one’s brand, products and services.

Well, these points definitely do not mean that entrepreneurs do not require investments at all. Well, investors should definitely be approached but for that you need to have certain possessions in your hand or mind that include a perfect business model, management expertise and of course, a backup plan to cope up with losses.

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