Typical Funding Mistakes That You Should Avoid

Whether you’re bootstrapping a new business from your basement or thinking big and trying to raise thousands of dollars from investors, making certain funding mistakes can be fatal.

A classic problem is overestimating revenues your new business will generate and underestimating expenses, says Joel Shulman, an entrepreneurship professor at Babson College in Wellesley, Mass.

"Entrepreneurs are the proverbial optimists," he says. "They don’t see the difficulty involved with bringing in those hard dollars, and they underestimate their business expenses and the cost of their living expenses when they are trying to start up."

Dr. Shulman says committing this error is the primary reason most new businesses fail in their first five years. "They run out of working capital," he says.

Plenty of other funding traps await the neophyte business owner. To get your new venture off to a good start, here’s a list of common mistakes to avoid when seeking financing.

By PERRI CAPELL

Full Story: http://www.startupjournal.com/financing/trends/20041109-capell.html?sjcontent=mail