Many people have a big venture capital, but failed to manage the business as well and eventually folded. Did the opposite. Why is that? One reason is imprecision allocate capital, resulting in errors priority use.
Some businessmen said, there are four allocation of capital that need attention so that businesses can run better.
First, the use of capital for the benefit of the business organization. Allocation at this point is important, especially for start-ups, but also should not be underestimated for the efforts already underway. Arrangements eg business licenses, processing of legal entities in both the notary, administrative costs and other businesses.
Second, the allocation for fixed asset investment business. In this item, often entrepreneurs, especially beginners and entrepreneurs are not exactly traditional allocate it. The investment for this was enlarged and without ignoring the others. Consequently when in need of funding, employers have difficulty because it was too much absorbed in fixed assets. Many people build a very good shop with a large investment, but forgotten when the store should be filled with merchandise.
Third, the determination of working capital that will be used in business, in order to be executed immediately. The allocation is important, to be able to move and set the wheels of everyday business. Working capital invested is too small will make the effort difficult to walk normally, so if too big will make the business less agile. This is where the need for employers to determine the proper allocation of not having problems in the middle of the road. Experience in months or years earlier, can be considered for the decision of this item.
Fourth, employers also need to incorporate unforeseen factors and risks that may occur in the allocation of capital. Situations and uncertain economic conditions in the future must be anticipated as an entrepreneur. Therefore, it could so suddenly because of the unstable economic conditions that unexpected risks occur, businesses will also be rolled up for losing the competition in the market.
Finally, in order to be successful and long-term efforts, must be wise and good at allocating capital in any business investment decision. How about you?