Building and scaling a successful business demands unwavering dedication and determination, with founders facing numerous challenges along the way. In this article, we present a detailed overview of the major business challenges that entrepreneurs encounter, accompanied by valuable tips on successfully overcoming or skillfully navigating around them.
1. Taking the Plunge
Many entrepreneurs find the first step to launching their business the single most difficult to take. This might involve creating a website, approaching a potential investor with their first pitch, entering a startup accelerator program, quitting their job, or just the simple act of announcing their venture to the world and committing their hard-earned dollars to the business.
Launching a business is a significant undertaking that demands thorough due diligence and meticulous planning. It is not a decision to be taken lightly. However, at this stage, many entrepreneurs start to doubt themselves and their business idea. They may let fear and uncertainty take over, and their insecurities may lead them to believe that their venture is destined to fail, with timing playing a crucial role in their concerns.
In reality, many successful billion-dollar startups have been launched in extremely challenging economic environments, proving that the timing is generally better than it may appear.
2. Cash Flow Management
Cash flow is essential to the survival of any enterprise, yet many fledgling entrepreneurs still struggle to pay the bills, let alone pay themselves, particularly during the early stages of the business before the checks start rolling in.
Delayed invoicing is a prevalent issue in the corporate world. After completing a job, a business sends out an invoice and then anticipates payment, typically around 30 days later. However, in the interim, it is still responsible for paying employees, contractors, mortgage or rent, operational costs, and more. During this grace period, resources can be stretched extremely tight, and the result of a non-paying customer can be potentially catastrophic.
The solution to this is stringent budgeting and financial planning, although these steps will not always save the founder from losing sleep over tight finances. One way to improve cash flow is to require down payments for products or services rendered. The sum should account for all associated expenses, as well as a proportion of profit. Another way to enhance cash flow is to implement a policy that requires faster invoice payments.
3. Marketing
According to sales guru Grant Cardone, if people don’t know you, they can’t buy from you. Marketing not only introduces consumers to the product but the brand too.
Marketing can be challenging for inexperienced, cash-strapped entrepreneurs, but irrespective of how great the product or service is, they must identify and reach the right market.
Leadership must first decide how to market the product (e.g., via social media, mobile, or print), considering the benefits of working with outside agencies. Small businesses on a strict budget need to ascertain where marketing funding will get the most bang for each buck. Free social media platforms are an excellent place to start since they allow marketers to experiment with different approaches. Leadership can later set their sights on more capital-intensive approaches if and when their budget allows.
4. Accessing Funding
For entrepreneurs starting with modest funding, there are various avenues open to them in terms of securing investment. The conventional path often involves seeking a business loan from a bank. However, banks may hesitate to lend unless the entrepreneur can demonstrate substantial existing demand for their product or service.
Other funding routes include business grants, business accelerator programs, crowdfunding, or angel investing. Many large multinationals started out running on loans or investments from friends or family members. Whichever route an entrepreneur chooses, they will need to keep in mind that money comes with strings attached. To ensure they do not give away too much equity, a self-fueled growth model may be a more attractive option.
5. Teamwork and Delegation
Having invested their blood, sweat, and tears into getting the business up and running, it is no wonder that many founders struggle to relinquish control. However, no one can do it all, or indeed, do it all well. A great business leader has the wherewithal to identify their strengths and weaknesses and defer to others where appropriate.
To delegate effectively, founders must construct a robust team comprising talented individuals with whom they feel comfortable and confident. It’s also important to identify employees’ unique abilities and leverage them accordingly.
6. Being a Leader
As the startup grows, employees will look to the entrepreneur for strong leadership. Having a strong vision and mission for the company is crucial, and leaders must communicate these clearly to employees right from the outset.
To foster success, employees must have a clear understanding of their responsibilities and the company’s overall business objectives. Ensuring each team member is fully aligned with the business’s direction and aware of their role in contributing to its success is vital, and this alignment begins from the top.