How To Use Venture Capital?

If you have the means to get money and start your own business, it will be time to test your ability.

How to use limited funds is a very important issue.

It may be very simple to borrow money to start a business, but it is also a dangerous thing, because doing business with other people's money is easy to be ambitious, imprudent and unrealistic. It is very easy to lead to business risks and entrepreneurship is hard to succeed.

Therefore, even if we want to borrow and start businesses, we must have our own funds, especially small capital businesses.

Only in this way can we be responsible for ourselves, spend every sum of money by ourselves, use sober and spend prudently.

Moreover, entrepreneurship does not necessarily succeed at one time. Once a failure falls into a debt crisis, it will adversely affect future business.

It is easy for entrepreneurs to ignore accounting costs on capital issues, which may lead to financial crises in the future.

Although entrepreneurs are full of entrepreneurial enthusiasm, if they lack rational thinking and comprehensive plans, they think that making money is very easy, underestimating the accounting cost in planning, and will bring great danger to enterprises, which will bring inflow of business to entrepreneurs and not enough funds.

Therefore, we must properly calculate the accounting cost, and then we can not change it arbitrarily.

It can not make the cost too big, because it is difficult to make money in the early stage of business, and the cost is too high, so that the opportunity to recover the principal is reduced and the confidence of entrepreneurship is reduced.

In addition to looking for ways to increase sales, the company can also achieve the goal of increasing cash flow by raising customer payment speed. For example, allowing customers to pay within 30 days instead of 60 days, they can withdraw cash 30 days in advance and speed up capital turnover, which will bring unexpected benefits to cash starved start-ups.

In order to avoid the difficulty of capital turnover, it is best to cherish the cash on hand and try to preserve it.

If it is not very necessary, then do not spend too much money on renting houses and equipment.

This is why some entrepreneurs, knowing that the real estate will soon appreciate, will rather rent offices rather than buy office buildings at the beginning of their business.

Do not buy large quantities of equipment in order to show your strength, try to set aside more cash as a reserve force for entrepreneurship.

On the other hand, it is necessary to be cautious in publicity expenses. Although publicity is necessary, the real success of enterprises is not dependent on them. Therefore, it is not necessary to spend a lot of money in propaganda at the beginning of business, so as to drag down enterprises. It is necessary to know that the actual cost of publicity costs will take a long time. Therefore, publicity can only be done as long as it is in place, which can not affect the flow of funds.

Entrepreneurs are usually prone to make two more extreme mistakes in calculating gross margin.

The first is the lack of confidence in their products, the fear of competition with people, the low margin of makings, and the possibility of selling goods without profit.

The other reason is that because we do not understand the market rules, we hope that the more we earn, the better, we will set the gross profit very high, resulting in the sale of commodities and the backlog.

Therefore, we should have a better understanding of our own balance of payments and have a clearer understanding of our own capital expenditure and income, so that we can set a reasonable profit margin to make our business go smoothly and keep the flow of capital flowing smoothly, so that the chances of success in business can be greatly increased.