By Ethan Benjamin
Entrepreneurship is fraught with a lot of challenges. Though both novice and experienced entrepreneurs have to face challenges, the nature of such challenges is significantly different. For the latter, most of the challenges encompass establishing a new brand or staying ahead in the league and making the business a significantly profitable one. But for new entrepreneurs, some unique and most common challenges like arranging the funding for startup, choosing the right business, maintaining cash flow, dealing with a significant number of competitors, finding customers, chalking out the right marketing strategies for making a place in the market, handling strapped budget situations etc. arise.
Let’s take a look at the most common small business challenges that new entrepreneurs often have to deal with, in addition to finding solutions for each of them. If you’re an aspiring entrepreneur, the following advice will help to make your journey a little easier.
The challenge: You want to grow or start your new business endeavor, but you’re facing difficulties for financing for new business owners.
The solution: Though various ways are there for arranging small business funding, starting from friends and family to conventional bank loans, many experienced entrepreneurs believe that self-fueled growth model is the best and less-risky one. Instead of trying to establish a big business house overnight, aim at your primary customers. If you can provide value added services to them, by the virtue of word-of-mouth publicity, your business will develop automatically. However, if you need to take outside funding anyway, don’t forget to consult an attorney to avoid future complications.
2. Right Business
The challenge: Two of the most crucial reasons behind failing of new entrepreneurs are the inability of selecting the right business and doing it in the proper manner e.g. ethically.
The solution: Firstly, to attain success in your new business endeavor, you’ve to have an outstanding product or service that adds value to your customer’s life. Secondly, you’ve to maintain your ethics. Having said that, you’ve to deliver exactly what you’ve committed to. Because if you fail to do so, again by virtue of word-of-mouth publicity, you’ll hardly have your business expanded as you’ll fail to attract new customers or retain your existing clientele. Remember – it’s easier to attract first time customers, but it’s much more difficult to retain them.
3. Cash Flow
The challenge: Small businesses can’t survive if they don’t follow cash flow guidelines and this is probably one of the biggest problems that new entrepreneurs face. For example, you perform a job timely, raise the invoice and get paid after a month. In the meantime, you’ve to bear all your business related expenses like your infrastructural cost, your employee’s salary and additionally, your personal expenses. And in case you don’t get paid at all, only some miracle can help you out.
The solution: Proper planning and budgeting are crucial for maintaining cash flow. One way to increase cash flow is asking for a down payment whenever you receive an order. That way, you’ll be able to pay your expenses and that too while keeping some profit aside. Another way of increasing cash flow is asking your clients for faster invoice payments. Say, instead of 30 days you can ask your clients to clear your invoice after 15 days. That way, if the client is late on payment, you’ll still have some time. The third way is a little uncommon and it entirely depends on your rapport with your own vendors. If you can manage to make your vendors agree to invoice you after 45, 60 or 90 days, you’ll have sufficient time to receive your payments and then clear their invoices.
4. Quitting Another Career
The challenge: Most of the new entrepreneurs leave their regular jobs in the overwhelming joy of becoming self-independent. And that too with less than the amount in bank required for living at least a month or two even without any payment whatsoever.
The solution: Money is something inevitable for living. So, quit your present job when you’ve at least the required amount for living a standard life as a financial cushion and have a robust business plan, or when you’re earning a standard amount from your new business endeavor.
5. Too Many Competitors
The challenge: Dealing with too many competitors in the same field.
The solution: Bring in something trendy and new in the market. Customers flock to a business that offers extensive product knowledge and a wide collection of the products they’re looking for.
6. Hiring Employees
The challenge: The hiring process can become a nightmare for most of the new entrepreneurs. After completing all the steps of recruitment like reviewing resumes, taking interviews etc, at times, they end up hiring an incompetent person.
The solution: Go through the ‘wanted’ part of the job sections of newspapers. You’ll be able to shortlist some candidates according to your requirements. Next, you can organize a ‘walk-in interview’ and offer them a tour of their future working environments. Next, sit with them across the table and finalize things. Remember to make everything clear for both sides because that’ll be extremely helpful to create a healthy work relationship and hire the ones that fit the vacancies, with respect to both their skills and attitude.
7. Finding Customers
The challenge: Finding prospective customers.
The solution: If your product/service adds value to people’s life, you don’t need to spend a huge amount of money on advertising in the initial stages. If you’ve a great product/service, people will automatically come to you. Just remember to keep your patience and approach only those people who show interest in your product/service.
8. Time Management
The challenge: Time management is probably the biggest problem, especially for the new entrepreneurs. In your own business, you’ve to take care of everything unlike a regular job where you only have to take care of certain tasks.
The solution: You’ve to enhance your time management skills. Following are some useful tips:
- Create goal lists: Make a lifetime goals list and break it down to annual, monthly, weekly and daily goals. That way, your daily goal will be in front you and you just have to be on track.
- Delegate the jobs that don’t require your personal involvement.
- Simply eliminate the unnecessary tasks.
- Assess yourself on a regular basis.
9. Delegating Tasks
The challenge: Probably due to their inexperience, new entrepreneurs often get things messed up when it comes to delegating tasks and they’ve to redo it all over again.
The solution: If you’ve a team of good employees, this job becomes much easier. Taking the help of good outsourced agencies is another way of performing this task easily. The latter might be a little costly but it’ll help to get the tasks performed efficiently and in a time saving manner. More importantly, remember to be absolutely specific about your requirement so that tasks are delegated with clear guidelines, which in turn would help to get them completed on time, in an efficient manner.
10. Finding Business Partners
The challenge: Finding reliable business partners is one of the most critical jobs that a new entrepreneur has to perform. A wrong business partner will provide you with a negative reputation and as your reputation will be connected to your partner, you’ll be risking the success of your endeavor somehow.
The solution: It’s difficult to judge your partner at the first sight, but if he/she has the wrong intentions, it’s bound to be revealed gradually. The only way out is to immediately dissolve the relationship with your partner.
11. Choosing What to Sell
The challenge: One of the biggest reasons for the failure of new entrepreneurs is selection of the wrong niche.
The solution: It’s very common that being a newcomer in the entrepreneurial world, you may not have the adequate expertise to select a profitable niche. In that case, hire a freelance market researcher who will survey the related market e.g. the field you want to do business in, and prepare a report of profitable niches. You can then analyze the report and decide on your preferred niches.
12. Strategies for Market
The challenge: You’re unaware about the best possible way to market the products/services. Your aim is to maximize your ROI with effective and targeted marketing.
The solution: Again, it’s a useful idea to outsource the marketing part to another third party who has adequate expertise. Prepare a marketing budget and hand it over to them and they’ll chalk out an efficient marketing plan. Remember not to take the chance of experimentation at this stage. You can perform that later when you’ve a productive baseline.
13. Strapped Budget
The challenge: Even when you’ve adequate cash flow, it looks like you’ve a strapped budget to exhibit your products/services to their full potential.
The solution: Admit that every entrepreneur faces the phases of having a strapped budget. You can lower the number of the situations by effective marketing efforts. Spend the money where it maximizes your ROI and stock the rest for other infrastructural and experimental expenses.
The challenge: Every new entrepreneur goes through a phase where he/she starts lacking self-confidence and feels like quitting. It mainly happens due to initial failures and watching the growths that are lower than expected.
The solution: You’ve to overcome self-doubt to become a successful entrepreneur. Discuss the matters within your close circle who are aware of your goals. You may even seek the help of fellow entrepreneurs, some of whom will be ready to offer advice and show you ways to overcome the hurdles during this phase.
Whether you’re thinking of becoming an entrepreneur or have just entered the domain, be prepared for these challenges. To achieve success, plan strategically, explore the possible ways, bring in a great product or service to the market and finally, do good business.