Entrepreneurs face a plethora of business challenges, especially at the start. It is critical that new small business owners need to be aware of what they are up against, and prepare how to overcome these challenges.
I met an old acquaintance of mine about six months ago who excitedly told me about the new business that he is trying to start. He is proud of the fact that he will be joining millions of entrepreneurs who have the guts and drive to push their big ideas into businesses that they own and operate.
I was happy to see his enthusiasm for his new venture but cautioned him about the business challenges that he will face. I told him that entrepreneurship is a roller coaster ride full of lows and highs, punctuated by various business challenges. Still dreamy-eyed and passionate, he believed that his business is going to be huge and that he will succeed in no time.
I met him again last week, and he’s been two months into the business. His first words were, “You were correct! I thought starting a business will be easy, but I have to face one problem after the other.”
When making the decision to start a business, it is important to remember that entrepreneurship is full of challenges. Below is a comprehensive list of 80 business challenges that you may face when starting and running a business.
Business Challenges in Setting Up the Business
Choosing the Right Business
- Find a business that stands a greater chance at success.
- Decide whether you want to start a business from scratch, buy a franchise, or buy an existing business.
Legal Decisions that Need to be Made
- Choosing the legal structure of the business
- Getting the necessary permits, license and other regulatory requirements from the government, which can sometimes be complex
- Ensuring that intellectual properties are protected via trademarks, patents and copyrights
Challenges in developing your business
- Setting the goals, direction, and strategies of the business
- Learning new skills and gaining the know how needed to run the business
- Adjusting to the isolation of working from home (or working solo)
- Shifting mindset to that of a leader who sets the course and makes decisions for the business
How to organize your startup
- Getting insurance and surety bonds for business, if needed
- Setting up the office (or home office)
- Finding suppliers willing to work with a startup
- Creating tangible prototypes from business ideas and inventions
- For a home-based business or one-person business, overcoming the challenge of not being taken seriously
- Accepting that you may need to wear many hats — and do them well
Business Challenges in Financing the Business
- Raising startup capital and seeking available financing
- Ensuring that the business has adequate resources to continue operation as the business is awaiting profitability
- Setting up adequate bookkeeping and financial management systems, including the option to hire a professional
- Establishing relationships with bankers and potential investors
- Knowing how to properly bill your clients and setting up a system to collect receivables
- Developing a system to collect on delinquent customer accounts
- Ensuring that there is sufficient sales volume to generate positive cash flow for the business
- Learning and understanding financial statements
- Finding resources to meet rent, property and other operating costs
- Managing taxes, making sure that you are able to maximize your deductions
- Negotiating with vendors and suppliers to get favorable terms, even potential financing
- Generating enough resources to pay off loans incurred by the business
- Obtaining both short-term and long-term loans, as dictated by the needs of the business
- Obtaining a line of credit for the business
- Keeping a watchful eye for fraud – from ecommerce orders to employee theft to accountant’s embellishment of your funds
Business Challenges in Marketing the Business
Finding the right customers
- Getting the word out that the business exists
- Developing a marketing plan for the business to identify the most cost-effective strategies to present your business to your target audience
- Implementing the marketing strategies outlined in your marketing plan
- Identifying your target market and the customers of the business
- Understanding customers, especially what they want, what they need and how they’d like to be approached
- Determining the best ways to reach the target market
Product marketing strategies
- Developing new products and services
- Choosing the right products for your business
- Finding distributors and getting your products on the shelves of retail stores
- Determining how to package the product
- Identifying and verifying that a demand exists for the planned products or services
- Setting prices that customers will be willing to pay while ensuring profitability
- Getting access to reliable supply of raw materials and inputs
Marketing your business online
- Creating an effective web presence
- Getting targeted and quality traffic to your website.
- Finding the right social media platform for your business, growing your follower/fan base, and keeping them engaged with you
- Building a subscriber list for both email and direct mail campaigns
- Finding up bid opportunities for potential accounts, and learning how to craft a winning bid
- Getting big accounts for your business, including large corporations
- Developing a customer service strategy for the business
- Learning how to sell (or hiring people who knows how to sell to do it for you)
- Learning how to advertise the business effectively, including tracking and measuring
- Competing with the big boys
- Tracking competitions
- Effectively networking both offline and online to find contacts and strategic alliances
- Getting feedback from customers (whether positive or negative) and initiating improvements based on these feedback
Business Challenges in Managing the Business
- Identifying opportunities for the business
- Keeping track of technology and tools that can improve productivity and help boost profitability
- Keeping abreast with the developments in the industry
- Rising above the inability to provide perks, competitive salaries and benefits. as well as brand name recognition that attracts new employees
- Getting organized
- Learning the value of your time and managing your time well to ensure that you live a well-balanced life
- Learning how to manage the overwhelming workload, especially if you are a one-person business
- Ensuring the maximum and efficient use of equipment and tools
- Being open to learn new skills and gain knowledge
- Setting the criteria for outsourcing help
- Finding good candidates for hiring, competing with big businesses and other organizations for the most experienced and educated workers
- Spending time and resources in recruitment and training
- Managing existing and available resources
- Having excellent organizational skills, breaking big goals into various tasks
- Delegating tasks to subordinates, if any, or to outsourced help
- Learning how to manage change, and adjusting plans and strategies accordingly to survive and thrive in the change
- Separating work from your life, and ensuring that you have work-life balance
- Complying with employment, health and safety regulations of the government, if required
- Negotiating leases and other contracts
- Setting up your computer system and selecting the best software to use to run your business effectively and efficiently
- Coping with the increasing cost of supplies, materials, equipment and manpower
- Dealing with paperwork, including organizing the documents
Business Challenges in Growing the Business
- Dealing with economic downturns and uncertainties
- Learning how to handle growth of the business
- Shifting mindset from that of an entrepreneur to an overall strategist
- Increasing need to use more complex systems and technologies to support the growing needs of the business
- Thinking about succession planning
- Ensuring sustained profitability by creating real value in the marketplace
- Planning the exit from the business
Article originally published on March 27, 2012
