If the venture is going to need outside capital, either as a startup or later for expansion, good financial statements and projections are essential. An investment brochure, professionally made and distributed, is often the only difference between a well-funded project and one that fails, simply because sufficient operating capital was not available. Venture capital is money that is risked. Those who risk money to entrepreneurs want to know that every important consideration of a business has been made and documented properly. Entrepreneurs must plan to have an adequate amount of money to fund their business.
Startups usually require more cash than anticipated by even the most conservative expectations.
It is well-established fact that most businesses start off under funded. A new business requires sufficient capital to endure unexpected hardships. Without sufficient funding to get the business off the ground, to persevere through business slumps, to carry receivables, and meet inventory and staffing needs, a business most certainly will fail. It is because the business owner, unlike an employee, stands the chance of higher returns for her risk. She also enjoys the personal freedom and responsibility of being her own boss.