Just like the popular saying: “The World is not a bed of roses; nothing good will come that easy”. Entrepreneurship comes with its own challenges. To the veterans these might not be new, and they will face them no matter how long they persist; but the aspiring entrepreneurs can throw in the towel when faced with some of these challenges.
This article presents four major challenges entrepreneurs face before or during their pursuits. If you are an already practicing entrepreneur, then you will be familiar with these challenges that come with the entrepreneurial process of building a business especially from scratch. For aspirants, this article will be worthwhile and will help them prepare their minds for challenges ahead, and hopefully avoid or overcome them. Read on!
FINANCING
When starting a business from scratch, an entrepreneur most times is faced with the painful challenge of raising capital. At times, trying to convince investors becomes very difficult thing to do as most investors only want to invest on already existing business with minimal risk. Trying to convince them on business that doesn’t really exist will take a whole lot of efforts. Some entrepreneurs (or to be entrepreneurs as the case may be) may have very brilliant business ideas which may not pass through the stage because of in ability to convince potential investors about the proposed ventures. It is not just enough to have great business ideas; your ability to convince another person to see same from your perspective will count a great deal in this regard.
New business ventures will require from time to time, injection of money to nourish them. Good knowledge of the financial needs and challenges that face business enterprise from time to time can spell out success or failure of a growing business. When these challenges come and they are not met, they will hamper the growth of the business, and can slowly bring about the closure of the business. For any business, constant flow of cash is the life wire; without this, the business owner is in trouble. Entrepreneurs should have this understanding and make proper planning when starting new business.
Entrepreneurs have also faced the challenge of finding financial institutions that are willing to lend them money or capital to get started especially with the nose diving economic condition which is hitting hard on every sector. Some do resort to other alternative financing sources, like borrowing from friends or well wishers, or even from mini financial institutions where interest rate might be outrageous. Some may use all their savings and may not have adequate capital to push them through the difficult times ahead. Whether you get capital from investors or obtain business loans, understanding your financial needs is critical. When going for any loan, assess the risks carefully, evaluating them against your business strategic plans; taking risks contrary to your business goals, objectives, mission and purpose will lead you into big financial trouble.
LACK OF PROPER PLANNING OR EVEN NOT PLANNING AT ALL
It is quite unfortunate that a lot of aspiring entrepreneurs jump into business without proper planning. Starting a new business without planning can lead to disaster. A lot of businesses have folded few months after start ups just because of improper planning or lack of it at all. From the word ‘go’ your business should have a plan. Write a business plan and use it as a guide, this will also help to appraise the business as it grows. Good business plan will spell out the difference between success or failure of a business. Good planning will ensure that the resources are well utilized.
A plan can help you increase cash flow, budget estimation and progress made in any stage, and lots more. From beginning of every business, entrepreneurs should have business plans. Are you an intending Entrepreneur? Don’t get too excited to jump into the business; take all the time to write a business plan and use it as a road map, checking off mile stones as your business grows.
MISMANAGEMENT OF AVAILABLE FUND
Your business funds if not handled properly; consider an instance where an entrepreneur engages in unnecessary and unplanned expenditures, this might result in constant negative cash flow and eventually, business failure. If you want to be successful in your business, then you must have a budget plan for regular expenses, such as utility bills, rent and wages etc, and must stick with it against all odds.
Even highly profitable businesses need to manage the money that comes in or goes out ; create an income and expense formula to serve as a model or guide and use it to monitor your funds monthly or over a given time. Having a prior knowledge of the financial needs and problems that face your business from time to time could help a great deal. Successful entrepreneurs understand, anticipate, and in most cases, avoid financial problems.
As an entrepreneur, you need to work hard to reduce your costs as much as possible, for example by negotiating with your suppliers to beat down the cost of supplies, trying to purchase items in bulk so as to reduce unit price etc.
DECISION MAKING
This may probably be one of the greatest challenges new entrepreneurs face in their quest for success. Certain decision can be very tough and an entrepreneur must take a stand. Wrong choice can be harmful to the business.
Decision making refers to the thought process that is involved while choosing the most logical choice from among available options. In this context, it is a process whereby an entrepreneur determines its goals/objectives and selects among the available options or alternatives, that which he believes will bring out the best outcome, or attain the desired objective with the most economical resources utilization.
New entrepreneurs are compelled to make hundreds of decisions a day, not making decisions could be more hazardous than making a wrong decision. In some cases can spelt doom for the business. Entrepreneurs should not hesitate to make decision even if it will cause them pains and thereafter better the business. Before making an important decision, get as much information available and review them carefully, analyze them and draw up worst case scenarios. You may discuss with your team or other board members or as the case may be, before making a choice. Making the right decision according to the complexity of a given business situation is what sets an entrepreneur separate from the others at the right time
Please read this article too: Reasons Why Many New Business Fail After The First Year.
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