Underestimating costs can have severe implications for a business, including:
1. Cash Flow Problems: When expenses exceed revenue, businesses face cash flow issues, making it difficult to cover essential costs. 2. Inability to Scale: Without adequate funds, scaling the business becomes challenging, limiting expansion and market reach. 3. Loss of Investor Confidence: Investors are wary of ventures that fail to manage their finances effectively, which can result in difficulty securing additional funding. 4. Business Failure: Ultimately, persistent financial mismanagement due to underestimated costs can lead to bankruptcy or business closure.