In business, the road to success is neither short nor evenly paved; as an entrepreneur, you will face many hurdles and obstacles along the way. The starting phase can be especially rocky, with multiple challenges often arriving simultaneously.
When you also factor in the faster pace at which everything happens these days, the problems faced by entrepreneurs become even more magnified. However, on the flip side, you also have better access to more resources and information – literally at your fingertips.
While these challenges can vary depending on the type and nature of your business, certain things are common across the board. To give you an idea, here are the three most common challenges of entrepreneurship that you are likely to encounter in the earliest stages of your venture, as well as some solutions you can use to mitigate them.
Overcoming Existing Commitments
From a chronological perspective, this is often the first concern you will have to address as a would-be entrepreneur. Many small businesses fail because their owners don't factor in the impact that starting a company will have on their relationships, their career, and their other responsibilities.
Existing commitments can be anything, including work or freelancing roles, marriages, child-rearing responsibilities, or any other social or volunteering obligations. In fact, starting a new business is often like taking care of a newborn infant – to be successful, it requires your undivided attention.
If you are running a sole-proprietorship or are acting as a partner in a limited partnership agreement, then you will find that time management is going to be a massive issue. After all, there are only so many hours in a day, and regardless of how good a multitasker you are, something will have to give.
Solution: If possible, the best thing to do is to ensure that this dilemma doesn't present itself in the first place. Before you plunge into a new business venture, make clear cut decisions regarding your other commitments.
It is essential to consult your family and friends in this process. Sacrifices will have to be made, but it is better to make them early on rather than only half-commit to your business and the other aspects of your life.
If you are already in a time management crisis as a business owner, there are several options available to you. If it is an existing job that is taking up a lot of your time, for example, you might have to decide which is more important to you. Of course, this depends on your individual circumstances; if you are young and single, for instance, then it's less of a risk to take the plunge full-time than if you have a family and a mortgage to support.
Alternatively, you can try to bring in more partners to handle some aspects of the business and help reduce the burden on your shoulders. Family and friends often present the safest choice for this type of arrangement.
Another option is to delegate more authority to your subordinates, although this solution hinges entirely on their competence and trustworthiness. In the early stage of your business, this can be quite a big ask.
Getting Access to Finance
While capital is a finite and scarce resource in business, initial funding is more of a problem for absolute beginners rather than experienced entrepreneurs. If you have never owned a business before, you will probably have to bank on personal assets to get your firm up and running rather than relying on venture capital.
Depending on your location in the world and the state of the economy there, bank financing may or may not be a viable option. In many under-banked markets around the world, aspiring entrepreneurs use capital derived from friends and family members to start the business.
But that is often just the beginning of your woes – cash flow troubles are a constant threat to the survival of small businesses in their early stages. Having enough money to tide your business over until the next cheque from your client arrives can be a recurring nightmare, and you may find yourself relying on unwanted cash injections.
Solution: There are two main ways in which you can reduce your cash flow troubles, if not outright solve them. For starters, you need to practice strict budgeting and highly disciplined planning of all your financial expenses.
This can be followed up with specific policies that can come in handy while doing business with your clients. For instance, in some industries, it is normal for firms to ask for an advance or down payment when receiving an order (this might be more viable in the case of regular customers).
Aggressive invoicing is often necessary to persuade clients to pay on time. If you start invoicing your clients faster than the typical monthly cycle, you will have some extra time to address it. Besides, this is the age of instant digital payments. You can always insist on immediate payment upon completion of a project or delivery of goods and service.
Finding the Right Employees
To scale up and create a successful business out of nothing, you need to start hiring other professionals eventually. This can be easier said than done, though.
Even aside from the task of successfully writing a job brief, getting it exposure in the right places, and matching the salary and benefits package of your competitors, the interview process is a whole other challenge in itself. To put it bluntly: if you are not particularly good at dealing with and gauging other people, then you will have a hard time with the hiring process.
Recruitment can also be very time-intensive. Depending on the number of people who respond to your ads, you might have dozens of resumes to go through as part of the screening process. And, even after you select promising candidates based on the interviews, there is always the process of negotiating adequate remuneration and benefits.
Solution: As with many things in business, adequate preparation can help save you a lot of stress. Here, this starts with your job ads; be very, very specific when it comes to your requirements and the qualifications you seek. The vaguer your teams, the larger the risk of attracting a lot of unsuitable candidates.
Using such targeting tactics should help secure you a relevant pool of potential hires. Following that, the interview process itself is all about a frank and if possible, pleasant exchange of information. Don't forget to ask candidates for bankable references from their past employers, too (if they have any).
Be candid about your expectations and the level of commitment involved in the job. Avoid adopting a domineering attitude if possible - approach the interview as a more level playing field where you are seeking partners who can commit to the business.
This doesn't mean that you should agree to all their requests regarding salary and other benefits, however. Try to arrive at a mutually agreeable compromise for both parties. The vibe you are aiming for is a friendly and reasonable boss.
A new business can throw many challenges at an entrepreneur, but the three mentioned here are undoubtedly the most common - especially in the earlier stages of your journey. As the suggested solutions indicate, there are no easy outs here. But with careful consideration and planning, you can overcome these challenges and steer your business to growth and prosperity.
What other challenges are you likely to face as an entrepreneur? Let us know about your experiences in the comment section below.