FINANCIAL MANAGEMENT

Financial risk management for startups

The failure statistics for newly formed and young enterprises is alarming. According to an undisclosed source about 70 percent of enterprises fail within the first year. Only 50 percent of the remainder stay in business for another three to five years.

Certainly, some failures are due to the business model itself. However, the majority of enterprises fail despite having a viable business plan. This is due to insufficient and poor financial management. Frequently, newly formed businesses decide to accept greater financial risk than is necessary.

RELEVANT QUESTIONS

• size of initial and subsequent investments
• reserve capital for financial sustainability
• operational shortfall and unexpected events

BENEFITS OF RISK MONITORING

• alignment of objectives with risks
• timely revised and corrected expectations
• sustainability path and financial robustness
• enhanced financial decision making