| Connecting Individuals to Their Dreams |
The Myth of Undercapitalization
This year more than 17 million people will become entrepreneurs, according to the National Association of Self Employed
(NASE). By the end of the year, 8 million of them will return to the corporate world because their entrepreneurial effort
did not succeed. Many will say the businesses failed because of insufficient capitalization. Actually under-capitalization is
not the cause of failure, but a symptom of a far more serious problem.
Many experts will say that undercapitalization is the main reason for the failure of an entrepreneur to achieve the dream of
having their own business. They will point out that failing entrepreneurs did not start with a large enough bank account to
offset the period it takes before a business is profitable. Statistics always back up this theory because, sure enough, the
money has run out before the business is profitable. Therefore, they argue, the theory must be accurate.
Hogwash!
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