List of Key Challenges or Problems to Entrepreneurs
New ideas, unceasing passion, unique talent, and the courage to take the risk and a route less travelled are entrepreneurs. Despite these excellent attributes, an entrepreneur faces several challenges to scale up to the top. An entrepreneur’s potential is compromised by the challenges he needs to face to be a successful entrepreneur. A simple definition according to Robert D Hisrich, “Entrepreneurship is the process of creating something new and assuming risks and rewards.”
According to the Uitm Entrepreneurship Study Group, “An entrepreneur is a member who actively forms or leads their own business and nurtures them for growth and prosperity.”
Let’s Look at the Five Key Challenges or Problems He Faces or Needs to Overcome
Raising Funds
Financial planning is the most crucial in any business set-up. Many ventures fail as they are not able to cater to the financial aspect of the growing business. An entrepreneur needs a substantial sum to start and promote the goods/services. You need funds to overcome the hindrances.
A steady flow of cash is necessary to sustain and survive in a volatile market and one may always need extra cash or funds to take care of the business during rainy days.
Risk of Losing the Capital
Starting a business is all about taking risks. Small business failure is relatively high. According to one study done by the National Federation of Independent Business (NFIB), 35% of businesses fail in the first two years, 54% fail in the first four years and 64% new businesses fail after six years of starting. This failure can be devastating to an entrepreneur financially and emotionally. An entrepreneur needs to assess the risk and be prepared to face the failure too.
Dealing With the Unknown, Self-Doubt, and Criticism
Every entrepreneur, no matter how passionate or talented he or she is, will deal with self-imposed questions whether he is doing the right thing in the right manner at the right time. These questions and doubts can be demotivating and discouraging. Criticism may also lead to self-doubt but one should know to separate the wheat from the chaff.
Cut-Throat Competition With Large Industries
Businesses in India on certain goods and services are controlled and have a monopoly by the already established industries. Hence, the entry of new entrepreneurs is very limited and challenging.
Heavy Taxation and Corruption
The rapid development of new business is not easily possible due to the tax and corruption in society. It is so prevalent that directly or indirectly, an entrepreneur faces the repercussions of it. Unless he or she has the grit to overcome with good financial background and unique innovation - it becomes highly difficult to succeed.
A Whole Responsibility
An entrepreneur might not be well-versed in all areas of business but yet needs to take decisions despite lacking complete knowledge about the same. The knowledge that the decisions are based can affect the success or the failure of the business.
Grey Market and Counterfeit Goods
The sale of goods through a distribution channel not authorized or intended by the manufacturer and this happens when the product of the price in the market is much higher than in other nearby markets. A new venture desirous of building its brand needs to keep a strategy ready to tackle the problems posed by the grey market.
Hiring the Right Talent
After deciding to launch a new product or service in the market, you need a team to execute this. A dream team is a secret behind any success in any business and there is no exception here too. Although, the major decision making is done by the entrepreneur he requires the right talented people to back him up. Getting the right people who trust your ideas and share a common vision is difficult.
Effective Marketing
Marketing plays a pivotal role in reaching out to people. No matter how wonderful and unique your product or service is but without good marketing, success in these businesses is not possible. You need an effective marketing plan to reach out to your target audiences.
Dealing with Stress
It is rightly said, “Without pain, there is no gain”. Success does not come without the passion to strive and sweat. The complete onus of the business is on an entrepreneur. An entrepreneur’s life can be a roller coaster. Fighting the odds of society, government, corruption, and facing competition and comparison, dealing with downfall and failure is a part of an entrepreneur’s life. Hence, he needs to be very possible, calm, and at the same time strong enough to handle the consequence of his decisions.
The challenges and struggles of an entrepreneur are umpteen but the right attitude to face failure in order to harness the energy to persevere is the key.
FAQs on Challenges to Entrepreneurs
1. How can entrepreneurs deal with cash flow management?
Even for the small scale business, cash flow is the basic concern. Improper management of investment may lead to huge losses in the business. The problem begins with the late invoicing. After submitting an invoice, getting paid 30 days later. During this period, the challenges faced range from paying our employees and contractors and even the common electricity bills.
The idea behind cash flow management begins with proper budgeting. Initially having a proper down payment for the products and services also plays its part. This down payment should be able to cover up the total value of the product and service along with some profit for us.
Along with the proper down payment, cash flow improvement can also be done with faster invoice payments. This strategy includes invoicing clients within 15 days. The remaining 15 days of the month can be utilized in addressing the issue and get paid before the upcoming month’s bill.
2. What are the advantages of being an entrepreneur?
Starting up a business comes along with its own set of pros and cons. While there are so many challenges an entrepreneur needs to face at the beginning of setting up a business, entrepreneurship brings along a new sense of freedom and flexibility in us. One will be self answerable and has the freedom of choosing our team or hiring new employees. With proper planning and creative thinking, one will be able to earn a lot of profit and can have an opportunity to save money in many areas of business. We can set up our own office according to our capability and comfort and have a wonderful learning experience with each passing year.
