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Difference Between Financial Unviability And Fund Unavailability

Apohan Corporate Consultants Pvt. Ltd. > Financial Strategy > Difference Between Financial Unviability And Fund Unavailability

You might have wondered why we have not spoken of the the financial angle of the viability. Capital is a very important resource to run a business successfully. Is it possible that a business is viable on all above accounts but is not viable because of lack of capital? Yes, off course. Inability of the management to raise adequate capital in time is also considered as one of the reasons for unviability of a business.
Here, we must make a distinction between two aspects: first that a business is not financially viable and the second that the management is not able to raise adequate amount of capital. These are two are entirely different problems and they need to be addressed in different ways.
A business is said to be financially unviable when it is not able to generate satisfactory returns through the operations at par with the expectations of the people who provided the capital in different forms. In case of some other businesses, it is possible to make the operations more efficient to turn them financially viable. In case of some other businesses, it is possible to make the business financially viable by renegotiating the terms and conditions of the various stakeholders that have provided capital in one or other form. However, some businesses maybe intrinsically financially unviable irrespective of any financial or operational wizardry.
Now, what about those businesses which are not able to raise the adequate capital in first place, forget generating adequate returns as per the expectations of the capital providers?

The million-dollar question is can the inability of the management to raise adequate capital be termed as financial unviability?

The answer is no! A vehement no!!
Then what this situation can be called? There is nothing wrong with or unviable about the business or its idea but there is something wrong with the actions if not competencies or philosophy of the management. When everything else is alright, shortfall of capital is a very easy to solve problem for a company.

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