10 Challenges of Starting Your Own Business « Legacy Consultancy

What are the biggest challenges entrepreneurs face when starting their own business? How do successful entrepreneurs handle and solve problems in business? Must an entrepreneur face these business challenges when starting a business?

If any of the above questions is currently running through your mind, then I will advice you read on as I trash out the top 10 business challenges you will face when starting a business from scratch.

If you are an entrepreneur, then I believe you will be familiar with the challenges associated with the entrepreneurial process of building a business from scratch. But if not, and you dream of becoming one someday; then I think you will find this article worthwhile.

I am writing this piece to enable aspiring entrepreneurs prepare in advance for challenges involved with the entrepreneurial process. It’s never my intention to discourage or scare you from going into business; In fact, I intend to achieve the opposite. I want you to venture into the business world and start your own business with a feeling of confidence.

1.    Developing the Vision and Business Idea

Developing a business idea is usually the first challenge faced by every entrepreneur when starting a business from scratch. Finding the right business opportunity or creatively developing an idea is certainly not an easy task. I call “Envisioning the idea” the first true task of an entrepreneur. As an entrepreneur, you must possess the ability to see what others cannot see. While others see problems, you must see opportunities.

But seeing opportunities is just the beginning. The main business challenge is going to be your ability to forge that opportunity into a business idea. I see this as a business challenge because the process of transforming problems into business opportunities is like trying to turn lead into gold. I call it the entrepreneurial process of “Creating Value out of nothing”; a process that brings innovative products into existence. Below is an illustration of how the process goes.

Identifying a problem > seeing an opportunity in the problem > Coming up with a solution > Forging the opportunity into a business idea > Integrating your solution into your business plan

Developing a vision is definitely a business challenge because an entrepreneur must sometimes assume the role of a sorcerer. Let me explain in detail. Most individuals are comfortable with the present way of doing things but it is the duty of an entrepreneur to envision and forecast the future.

An entrepreneur must always be ahead of his time or else he will lose his relevance. It is the duty of an entrepreneur to bring into the present what is yet to be. It is also the duty of an entrepreneur to bring solutions to other people’s problems. Let me give you two practical illustrations:

• Back in the days when cars were custom made and exclusively for the rich, Henry Ford envisioned affordable cars for the masses. That single vision made Henry Ford one of the richest men in history.

• The Wright brothers envisioned a flying machine but they were massively opposed because the thought of humans flying was perceived as impossible. Today, the airplane is a common reality.

I believe with these examples, my point is clear. Developing the vision and idea is the first true task and challenge of being an entrepreneur.

2.    Assembling a Business Team

The second business challenge you will face in the course of starting your business from scratch is assembling the right business management team. When I talk about a team, I am not talking about regular employees. I am talking about a “strategic round table business team” that will meet regularly to brainstorm on ways to grow your business.

The process of building a business team starts even before the issue of raising initial start-up capital arises. Remember I said that most brilliant ideas never scale through the phase of raising venture capital. Well, this is where most emerging entrepreneurs miss it. Most brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as an individual. A business team is a vital, yet often ignored key to raising venture capital successfully.

As an entrepreneur, you are bound to have strengths and weaknesses. That is the more reason you need a business team to cover up or compliment your weaknesses. A team is a necessity for building a successful business. Now finding a business team is just the second hurdle, transferring your passion and vision to your team is the next. “If you can sell it there, you can sell it everywhere” just to paraphrase a well-known song by Frank Sinatra.

It’s your duty as an entrepreneur to make sure your team sees the same future you see. They must believe in your possibilities and must also be passionate about making that possibility a reality. If they can’t grasp your vision, if they can’t see the future with you, then they are not worthy being your team.

Your strategic business team should comprise your banker, your accountant, and any other seasoned entrepreneur that has the capability to be of tremendous impact to your business. A question on your mind right now might be “how am I going to pay this team” My answer is: I don’t know. You will have to figure that one out yourself or better still, you can consider bringing them on board as partners. The added bonus of this last option is that they have everything to gain from your success!

3.    Raising Capital for your Business

After developing your idea, and getting your business team in place, the next challenge you are going to face when starting a business from scratch is that of raising capital. As an entrepreneur, you are the only one that knows your business idea to the core. You are the only one that can envision the story of your future. It is helpful though, to have a team behind you that knows your vision and is able to provide investors with extra information and a good feeling.

Trying to convince investors about something that doesn’t exist yet is definitely a challenge, especially in this time of economic recession. Trying to make them understand that you are trustworthy and equal to the task is not child’s play, especially when you are building your first business and have to prove the world that you are up to it.

There is more to raising capital than just simply asking for money. Most investors want to invest in already established businesses with minimal risk and they want to be sure that they get returns for the risk they took. Most brilliant business ideas never scale through the venture capital stage because the entrepreneur is either not prepared or lacks what it takes to raise the needed capital. Just as Robert Kiyosaki says:

“The world is filled with brilliant ideas and excellent products but the world lacks seasoned entrepreneurs.” – Robert Kiyosaki

To overcome the challenge of raising capital, you must develop the ability to sell your idea and vision to potential investors. When I say: “sell your ideas“, I mean improving your communication skills and your manner of presentation. In the game of raising capital, you must have a good story to tell, backed by a strong business plan, a good business team and good persuasion skills. You must know how to pitch angel investors and venture capitalists alike.

4.    Finding the Right Business Location

Is finding a good location a business challenge? If you want to start a shop I’d say: yes! Otherwise I don’t know. But what I do know is that finding a good business location at the right price is definitely not easy. How do you get a location that has a rapidly growing population, good road network and other amenities at a good price? Well, you will have to figure out yourself. Nowadays many office buildings are empty due to the financial crisis, and rents are negotiable. Try to find a location where there are more starting entrepreneurs to split costs and help each other with infrastructure, leads and/or business.

5.   Finding Good Employees

Most managers think the process of finding good employees is an easy task. They define the process of finding an employee as simply presenting the job description and the right employee will surface. But there is much, much more to it than that.

Business owners know how difficult it is to find a hardworking, trustworthy employee. Most employees want to work less and get paid more. Finding a good employee who will be passionate about delivering his or her services is quite difficult. Finding good employees is a minor task compared to the business challenge of forging your hired employees into a team. You may have great employees but if they can’t act as a team, they are worthless and will yield nothing but stagnation. A football team may have great players but if they fail to play as a team, their combined possessed skills are utterly useless.

Employees are the representatives of your business to your customers and the outside world. They are a reflection of your business culture and ethics. If just one of your employees rude to just one of your customers, it is going to portray a bad image for your company. Remember: Bad news travels fast! So you must be very careful when hiring employees. Remember the golden rule of business; “Hire slow and fire fast.”

Teambuilding and hiring the right employees is a science. When you start your own business, find a Taylor Protocols Consultant (yours truly) to get you off at the right foot!

6.   Finding Good Customers

The sixth challenge you will face in the process of starting a small business from scratch is finding good customers. Note the keyword “good customers.” In the process of building a business, you will come to find out that there are good customers as well as bad customers. You must be on guard for bad customers. Good customers are really hard to find. A good customer will be loyal to your company and will be willing to forgive you if you make a mistake and apologize. A good customer will try to do the right thing that will benefit both him/herself and your company mutually.

Bad customers will always look for loopholes in the company’s policy to exploit and make a few gains. Bad customers will always try to exploit the company’s goodwill and look for ways to rip off the company. Bad customers are responsible for bad debts.

Good customers build your business and bad customers will always try to liquidate your business. Just as you fire employees, you must also be prepared to fire bad customers without hesitation. Don’t invest all your time and effort on customers that simply are not worth it! A beautiful saying goes like this: “Don’t get up on a dead horse and say: Giddy-up!”

7.    Dealing with Competition

Competition is the next challenge you will face when starting a business. Most individuals see competition as a plague but I see competition as a good challenge. I see competition as a benchmark for creativity, the main engine that stimulates innovation and production of quality products at great prices. Without competition, there will be no innovation and without innovation, your business will become stagnant.

I see competition as a welcomed challenge and I want you to do the same. Competition keeps us on our toes and drives us to constantly improve our products and services. But you must be warned. Competition can make your business lose its relevance in the eye of your customers so you must always be on guard and on top of your field.

8.   Unforeseen Business Challenges and Expenses

Just as a pilot is always on the watch for unpredictable bad weather, thunderstorms and technical failures, so a good entrepreneur must always be prepared for whatever may occur. Unexpected challenges can come in the form of:

• Not being able to make payroll
• Bad debts from customers
• Loss of market share
• Unpaid bills and taxes
• Inadequate stock or inventory
• Unexpected resignation of staff from sensitive positions
• Dwindling working capital

These business challenges, if not handled properly, can ruin your plan to build a successful business. Another challenge you must expect is an unforeseen increase in business expenses. If not handled properly, it might result in constant negative cash flow and eventually: business failure.

9.    Keeping Up With Industrial Changes and Trends

Change in trends is a challenge you must be prepared for when starting a small business. Trends have made and broken lot of businesses. I know a lot of profitable businesses that have been wiped out by slight industrial changes and trends. A typical example is the Dotcom trend of the mid-nineties, where many established businesses were wiped out by emerging web based Dotcom companies.

When the Dotcom era began, business owners were left with only two options; Either they joined the Dotcom train, or they got run over by the Dotcom train. Seasoned entrepreneurs know that a trend is a friend and they are always willing to swiftly adjust their business to the current trend.

Keeping your eyes open to spot trends is really a challenge but the big task will be your ability to quickly use the trend to your advantage. These days, we can see the same thing happening in the retail business. Traditional shops that don’t have a webshop are having a hard time surviving.

10.  Exiting the Business

When building a business from scratch, you are going to face the challenge of determining your exit strategy. You have to plan your exit strategy before you even start the business. Most entrepreneurs run their business without any plans to exit and even if they have an exit strategy, they find it difficult to implement it.

Before starting a business, it is advisable to plan an exit. Lack of an exit plan is the primary reason why most businesses crumble after the death of the founder. An exit strategy is very important to the long- term survival of a business. Now how do you plan an exit strategy? There are benchmarks you can use to determine your exit from any business. Most smart entrepreneurs will use a certain benchmark as a target and once this specific target is reached, they exit the business. Examples of such benchmarks are:

• Annual Turnover
• Annual sales
• Customer base, subscribers or number of users
• Asset Base
• Market Saturation

Now when it comes to exiting a business, there are three strategies you can apply. You can choose to exit a business in any of the following ways:

• Turning over the business to professional managers

When your business reaches a certain stage of maturity, you can exit by turning it over to professional managers. In this case, the business still belongs to you but you are not involved with its day-to-day affairs. You will have to give up your administrative role to assume the role of a watchdog. When you exit in this manner, you will have more free time to look at other projects or retire.

• Selling the business privately

In this case, you are exiting the business by selling it to a private investor. In the business world, it is called M&A (Mergers and Acquisitions). To exit your business this way means that after the sale and transfer of assets is complete, you have nothing to do with the business ever again.

• Taking the company public

The unique thing about this type of exit strategy is that while you are selling your business (in the form of shares) to public investors, you still maintain control over the business. Important! Before you apply any of these exit strategies, I’m advising you strongly to consult with your attorney or legal adviser. But ultimately, it’s up to you to decide the exit strategy you want to apply; but always remember: “your exit is more important than your entry.”

As a final note, I want to state clearly that challenges come only to make you stronger; so don’t faint in the face of challenges. Stand tall; keep moving your business forward and I will see you at the top, because I’m going there myself!

Source: https://www.ibtforum.com/

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