ENT 655- Lack of Funding

As highlighted in the reading, a quote from the 1980 White House Small Business summit told the New York Times: “Our problem is small business has always been a ‘motherhood’ issue- everybody is for it, but everybody ignores it” (Cortese, 2011). This has been an ongoing problem in the business world. Many investors are willing to fund larger more established companies , rather than upcoming businesses. Even with the ever-increasing movement to “buy local” there is still a gap in funding and resources for smaller businesses.

For smaller ventures, a lack of the appropriate amount of capital has somewhat of a domino effect. Little, or no, capital leads to: undeveloped products, business being stifled because expansion can’t take place as needed, inability to hire as needed, and most importantly a decline in innovation. Lack of capital is a major contributor to the reason why half of new businesses don’t last longer than five years. Many ventures have tried to rely on traditional methods such as credit cards, personal savings, and wealthy relatives to garner early funding.  However, financial crisis’s or unforeseen circumstances such as the recent COVID-19 pandemic have made things more difficult.

It’s ironic to think that some of the most successful companies were established in tough times themselves. Recessionary environments have birthed companies from thr likes of MTV to FedEx (Cortese,2011). Although things were different at the time, this truth makes one wonder about the many potential great companies that never get a chance to reach their full potential as a result of lack of funds (Cortese, 2011).

Reference:

Cortese, A. (2011). Locavesting: The revolution in local investing and how to profit from it. Hoboken, NJ: J. Wiley & Sons.