Updated: Jun 4, 2019
Starting a business can be exhilarating and wildly fulfilling. However, I am sure many entrepreneurs will agree with me that it can be quite complicated. In fact, one may or in my case WILL face challenges in ways I had not imagined. I had to humbly sit back and take time to know and understand the possible challenges and problems I would encounter which helped me to avoid common pitfalls. However, I will share common challenges I faced and continue to experience as I evolve into a "bonifide" entrepreneur. I'm not there yet.
Before I speak on this point, let me just unequivocally say MAKE SURE YOU HAVE YOUR SAVINGS. The majority of small businesses that fail, do so because of lack of cash. Research shows that “starting out with too little money” is one of the reasons for the business downfall. Often, this is because owners borrow based on their idea of a successful business, instead of borrowing for a worst-case scenario. A start-up business owner needs to be optimistic, but often is too optimistic about seeing profits. Without adequate cash flow, slow sales or a downturn in the market can end the business before it has a chance to gain momentum.
The issue of cash flow is unpredictable. Here is my experience:- I have a very good business relationship with a client who is a key account for my earnings. However, the company is a bit slow on making payment on the set date. On the other hand, I have contracted workers to pay. As a start up, I never want to add pressure to a new account that I am very dependent on. Luckily, I had my own savings that I used as cash flow. I had anticipated the possibility of this happening so I was not overwhelmed with doing payouts. In fact, I was calm and was able to focus on other things. In the end it also builds confidence in your employees they perceive your company as being stable.
By the way, as stated before, you have to be aware and prepare for challenges so you will know how to handle them. This is just one of example. I also recognized that I will not be profitable in the first year as I have to pump back the profits into marketing etc. in order to grow.
Trying to Do It Alone
A common problem for most entrepreneurs is the belief that they can handle all of the start-up operation by themselves. It may be a cost-effective way to run the business, but operating the entire business on your own may not be a wise decision or the best use of your time. Many small-business start-ups may not require full-time employees. I am still at this stage but I do hire contractors to do external work. However, I still get a bit overwhelmed by doing my own marketing. (I do my own website, flyers, promotions etc.), keeping a breast of finances, running errands, doing research, planning for events, and attending to personal matters. For me, I see it as the only way to save at this early stage
However, I attended a workshop for start ups and I received some advise which made sense. If you invest in hiring 1-2 persons to help you, you can easily expand your business by taking on more clients. Well, I do agree and will adhere to that advise - eventually. I just have to know the right time.
The most important thing with this is, I am willing to hire and pay an experienced and reliable person. Invest in hiring the right people. It is certainly a part of ensuring your business runs well and you can avoid other common business mistakes. Employees are a crucial component in the success of your business.
Pricing your product or service
Listen, although you may be competing with the big box companies, you will most likely not be able to price like them. The nationwide and international companies obtain products at rock-bottom prices because of the sheer quantity of goods or a company that offers a service rely on being established with years of experience. Pricing your goods or services too low can delay the process of turning a profit. Instead of erring in this way, I have to be fair and consider all factors including my livelihood as I compete in the marketplace.
I try to find that value added factor that will not cost me at all. Example, the turnover time it takes for me to prepare a proposal. I guarantee a short response time to prepare a proposal that is specific for the company’s need. They instantly like the idea and it instantly serves as a plus for the potential client.
There are so many other challenges which I will make mention of in other blogs. The main one being TAXES, which is a scary topic. Whew! Just the thought of the word makes me cringe. However, a taxation expert told me recently," don’t be afraid of taxes, just face it because it is here to stay and cannot be avoid."
At the end of the day, staying focus and being persistent in achieving your goals will certainly guarantee you great rewards. Hang in there!