Often, we hear people saying that someone has stolen their money in the name of starting a new business, or someone has borrowed money and failed to return. This usually happens with the entrepreneurs who rope in money from a few people for the capital they require to start their business. But later on, after a few months, they may fail to return the same with interest. Does that mean they are fraud or have run away with the money? Certainly not!
The zeal and mindset of an entrepreneur can never be this narrow and shallow that they will rob money in the name of starting a venture. So, what can be the reason behind this unfortunate incident?
Investing in wrong avenues
One of the major reasons for losing money is when you put it in the wrong heads. And by wrong heads we mean by investing in wrong avenues i.e. evaluation gone wrong before investment. It requires a lot of perseverance and business acumen to do it rightly. Hence, primarily the entrepreneur should find out the ways of investment and plan accordingly for long term benefits.
Knowledge about the market turbulence and the capability of the person to whom you are handing over the money for investment is highly critical. This is not only about trust; it requires close analysis of the investors’ previous records and their ability to give you the best return.
Right evaluation of the market situation
Hence you need to do the right evaluation of the market situation, the inflation rate and the person with whom you are investing. Most of the times, the entrepreneurs fail because these do not fall in place. There are cases where the entrepreneur has invested in a wrong or not-so-suitable avenue and hence the return ceases gradually and stops ultimately. This involves huge amount of money and hence people assume that the entrepreneurs have run away with the money.
To assess the fields of investment and the person correctly, one must be in the market for long, have knowledgeable advisors around and patience to let the maximum return come with time. But such competencies may not be present among many young enthusiastic entrepreneurs. They may have fresh innovative idea, but lack in financial knowledge and evaluating power.
Common mistakes entrepreneurs make
Hence investment in wrong heads is one of the common mistakes entrepreneurs make. With this they lose money and quite a few of them shut the business and return to corporate while others continue to struggle to get the maximum return.
Thus, it is not advisable to blame an entrepreneur when he/she loses money due to business growth. There can be plenty of other reasons where common people are not affected or harmed. Decision making and evaluation techniques are the key to this. The day an entrepreneur completes spending 5-6 years in the market is when he is in a better position than before to take the right decision in investments. He must be having a fair idea about market turbulence and investment aspects.
Experienced entrepreneurs are less likely to lose money and be blamed. They hire professional financial advisors to aid them with decision making and choosing the best possible avenues to create a long term high returns.
Are you an experienced entrepreneur? It’s time you get into the act and stop making these common mistakes so you are not mistaken and your efforts don’t go in vain. Hence it is not advisable to blame an entrepreneur when he loses money and is unable to meet his commitment that he had made to you. When he made the commitment