While it’s smart to start early and not waste time before doing something about a viable idea, most times, new entrepreneurs are often limited by the euphoria of starting something novel. It is easy to think the greatest challenge an entrepreneur faces is knowing how to start, but in today’s competitive business landscape, there are myriads of challenges plaguing budding entrepreneurs.
Let’s talk about the 5 challenges to consider before starting a business and what can be done.
1. Seed Funding
Whether you are about starting or run a growing business, you need funds. Usually, compared to already established businesses, the capital available to startups is so little or nonexistent—this is a major challenge for new entrepreneurs.
What to do: There are many ways to generate funds; from the bank loans, credit cards, non-profit lenders, family, friends or cooperatives to kick start your business idea. Once you’re sure of the suitability of a funding option, go for it. Personally, I prefer the do-it-yourself approach.
I was once told of Chika who had just completed a training on Forex trading. With no kobo (cent or penny) in hand, she shared her desire to start trading on Forex with her friends. However, instead of waiting till she had a million naira, she was able to convince her friends to give her idea a financial nudge. They did with little funds and had returns, and tried again with more funds and got more returns. Of course, Chika always took her agreed commission!
Now, she no longer needs her friends’ money. I believe this is the best way to do business—but we all know you need good relationships to pull this through. The trick is to first exhaust all minimal risks options before considering the big risks ones. Doing business this way guarantees learning while growing. However, if you do feel your business needs additional funding, be sure to make the right calls. Never give up your head just to collect a cap.
2. Human Resources
Picking and developing the right team for a startup is stressful and can be a very difficult task. It can be an overwhelming challenge for young entrepreneurs, especially with very limited time.
What to do: Be clear and specific on your requirements when placing ads for hire. You will save yourself tons of time if you keep your hire ads exclusive and ultra-specific. Once you’ve done this, make sure you know what qualities you want—qualities usually come after you’ve considered qualifications.
Try not to overwhelm your potential employees with the recruitment process; it should be specifically short and simple. Seek partnership with your employees, make them tap into your vision and make them believe in your vision almost as passionately as you do. This doesn’t imply allowing your employees ride on your back. However, whatever relationship you build with your employees should be clear, well-spelt out, understood and mutually rewarding. You must learn to reprimand and reward in such a way that the intended message is clear.
3. Route to Market
You are almost sure your product will make returns until you meet the deadlock of ‘pricing’—how much should I sell? Or you hit the wall of ‘what should I sell or give for free?’ You could also be faced with the challenge of how best to sell your product or service.
What to do: Outsource!!! Well, for me, there are things I know I can’t exactly do myself, so I leave them to people who are excellent at them. Hire an affordable freelancer who will help you handle SWOT analysis—to know and exploit your Strengths, Weaknesses, Opportunities and Threats. Get freelancers to create a report with suggested opportunities, backed by potential profit margins.
Create a budget and get your consultant to develop an efficient marketing plan that uses the budget to generate profit.
4. Time Management
Building a business to succeed is nearly impossible if you plan to simultaneously manage another career alongside. At some point, you’ll have to sacrifice one on the altar of the other. Even with all the time at your disposal, you will still have to grapple with time management issues.
What to do: So you must learn to set daily, weekly, monthly and yearly goals. Growing up, a radio station always had on broadcast a song that ended with a phrase that stuck with me — “…time na money ooo” (time is money). Beyond losing money, time spent or wasted can never be regained.
Have a daily plan, especially a ‘To Do’ list and strike off accomplished tasks. Set aside specific time for your business and if you intend keeping your career, dedicate at least an hour per day to your business.
5. Cash Flow Management
The earlier you seek to control how money goes in or out of your business, the better for it. For instance, you have done an excellent job for a client, sent the invoice and hopefully waiting to get paid 30 days later. Meanwhile, you have to renew subscriptions, pay workers’ salaries, renew rent and reward yourself—you know you have the money, but it’s still with your customers with little or none in your wallet.
What to do: I learnt a great lesson from a friend who makes my clothes. Nuru does not really care about percentages—he won’t say, “pay me 75% upfront”—as he is barely educated. He will always say, “You have to pay me all the money to get your work done.” He will then add, “When I’m done and you’re satisfied, you may pay me for a job well done.”
Evidently, one very effective way to improve cash flow is to require a down payment for your products or services. The down payment should cover all expenses associated with a given project and if you can, include some profit for yourself.
You could also negotiate flexible payment plans with your vendors—I mean do to your vendors what you don’t want your customers to do to you. Your vendors will most likely cut you some slack considering they’ve been in the game and has far more clientele and experience than you—a newbie in this new venture.
The entrepreneurship journey is scarcely without hurdles but only the victor takes the spoils and accolades. Perseverance and intelligence are virtues all entrepreneurs must covet—use them wisely while you press towards your goal.
Remember, you are not the first to travel this path. Thankfully, your predecessors have left a trail of many resources to help you get through. So, simply enjoy the ride and reap the immeasurable rewards that come with building a thriving venture.
Adapted from TechNext Blogsite.