Each year several new companies set up shop for businesses; while it is an exciting time for new age entrepreneurs, it can also prove to be very difficult. Barely half of these businesses are still running after the five-year mark. With the multiple problems faced by entrepreneurs, especially during their early years, it is understandable why most companies don’t make it.
From the capital requirements to time management and even self-doubt, the challenges keep popping up. However, there are solutions to overcoming these problems faced by entrepreneurs, and I will be discussing five of them in this article.
The Problem: As a new age entrepreneur, you have all your bright ideas to start a business, but little capital. And the amount of money available to most new ventures and start-ups is often very limited. Even the investors don’t easily open up their wallets for every great idea that comes knocking on their door.
The Solution: It is not always a bleak situation because there are several ways to raise capital. Entrepreneurs’ solutions to lack of money could include pursuing a grant, applying for a bank or microfinance loan, help from family, venture capitalist, crowdfunding, etc. Research on these routes to find what works for your business model. Another route I would advise is the self-fuelled growth model whereby entrepreneurs fund their business endeavors.
Think it through thoroughly; can you grow your business over the next five years without getting investors or a loan? If you do not find the need for external funding, then self-growth is the best way to go for a small start-up. It’s vital to build gradually and not try to launch a multi-million dollar company overnight. Focus on your new customers and keep working on expanding. At this point, referrals will be a huge advantage, so your customer service needs to be exceptional.
2. Cash Flow Management
The Problem: Cash flow is a vital aspect of the survival of small businesses, yet it is a problem faced by entrepreneurs. Most of them struggle to pay the bills while waiting to get their sales paycheque. A primary reason for cash flow shortage arises from delayed invoicing, which is a big challenge new businesses face. You sell a product or service and send out an invoice. The pay will likely not come in immediately, but bills such as employee salaries, contractors’ fees, utility, mortgage, etc., keep coming in.
The worst part is when a customer fails to pay for the job done, you can risk everything. Sometimes you might receive several orders, and while you are micromanaging your bills till the cheque comes in, a natural disaster or new stringent government policies hits you. What do you do?
The Solution: Having a proper budget and planning strategy is essential for the maintenance of cash flow. Besides budgeting, you can also require a down payment before sending out your products or services. The down payment you request should cover the full expense of the product and a part of the profit. With this, you are assured you won’t have to stay struggling with cash flow to pay your bills. You can also invoice them in 14 days, which is half of the regular invoice period. Thus, if the customer makes the payment late, you have those extras two weeks to sort it out.
Additionally, ensure you are covered by insurance in the event of unforeseen circumstances that can affect cash flow. Likewise, you can save up some financial reserves or emergency credit. It should be more money than you think you might need, so you’re not short when you need cash. Even when your profit turnover is high, do not relent in putting some into the reserve. It is because as your income increases, so do your expenses. Remember to actively track your profits and losses, pay taxes, plan for eventualities. If you have the budget for it, you can also hire a financial consulting firm.
3. Employee Recruitment
The Problem: As much as applicants dread job interviews, entrepreneurs also dread the process as much. The recruitment process can take several days to review resumes, sit through interviews, and sort through both the qualified and unqualified applicants until you get the right one. And then you have to think of retention strategies, especially if you got an excellent employee.
The Solution: The entrepreneurs’ solution to recruitment is to be exclusive of the job requirements you advertise. It will help to reduce mass application, and you have less to sort through. You can make things easier by conducting a job quiz through which you can shortlist the candidates who have suitable characteristics for the specific job role. Also, you can ask for referrals from those who can sincerely attest to the applicant’s work ethic and potential. Once you have your candidate, ask them about their expectations and if they plan on staying for the long haul. Also, to encourage retention, you can provide a competitive offer to your prospective employees.
4. Time Management
The Problem: For a new entrepreneur, wearing many hats at the same time can be tricky. It will often seem like there is so much to do but with so little time on your side. With so many things to juggle, some entrepreneurs forget to learn how to live a full life, and it can take a heavy toll on their health and well being.
The Solution: Time cannot be multiplied, but it can be managed. You will need to create a balanced schedule as to how you spend your time wisely. When creating a schedule for time management, you can consider the following to guide you:
- Map out a list of goals starting from the long term to short term life goals. By doing this, you quickly achieve the short term goals to fulfill the long term goals.
- Delegate or outsource tasks that don’t necessarily have to be done by you. For instance, if you are pressed for time to post a blog on your business’s website, while you also have essential invoice issues to deal with, you can get online writing review services such as Best Writers Onlineor Online Writers Rating.
- Make use of tools that can help you with time managementand maximize efficiency and productivity
5. Marketing Strategy
The Problem: Quality of product and service, check, functional website, check, traditional, and social media advert, check! Yet it may seem like you don’t have enough customers buying, calling, referring, or visiting your website and social platforms. It is a struggle all entrepreneurs face, either at the start or midway through a product launch. It can be disheartening to put in a lot to roll out a product and get very little response.
The Solution: Again, if marketing and ad placement isn’t one of your strong suits, you might want to outsource the job when you don’t have an in house marketer. Save yourself the trouble and cut down on experimenting. All that can come in later after you’ve established strategies that work.
There are numerous challenges entrepreneurs may face. Those who stand firm and actively seek solutions always come out the other end, more thoughtful, resilient, and more successful in the long run.
Ana Mayer is a freelance writer who is a qualified specialist in the field of digital marketing. She writes for different news portals and thematic blogs that helps her stay at the heart of the programming and technology news. Such work gives her the opportunity to write articles on the most relevant topics of today.