Starting your own business can involve new challenges and experiences. Start Up Loans identified 10 common start-up challenges and how you can overcome them without burning out.
Starting your own business brings many benefits. Doing something that you love and attracting customers to buy the product or service you’ve created is hugely rewarding. Growing a company and providing jobs for other people can be another big thrill.
But running your own business is not easy. Working for yourself without the safety net of being an employee can be a lonely, frustrating and challenging experience. By understanding the challenges you might face and how to deal with them, you’ll be much better prepared for potential problems and give your business the best chance of success.
CHALLENGE: With the excitement of a new business idea, it can be tempting to launch without much forward thinking. Yet a lack of planning can mean your business runs out of cash or isn’t prepared for vital activities such as marketing or dealing with suppliers. Business owners who plan and set themselves objectives are more likely to succeed.
ACTION: Create a detailed business plan that covers areas such as marketing, staffing, finance, and sales. Regularly review and update your plan as the business develops.
CHALLENGE: Understanding the market need for your product or service is a crucial aspect of your business plan. Without enough people willing to buy your product or service, your start-up won’t succeed, no matter how great your idea.
ACTION: Spend time conducting market research to collect information about potential customers. This will reveal your target market’s size and help you decide if there is enough demand for your business idea.
CHALLENGE: It can be easy to get caught up in the latest marketing trends and spend lots of money on marketing techniques that end up costing you more than the sales they generate.
ACTION: Marketing should be effective. Create a marketing plan for how you intend to reach your customers. Most start-ups operate on small budgets, so investigate different marketing methods. Are there low-cost or even free ways you can reach your target audience?
If you have funds for marketing, invest wisely in the most appropriate tactics. Measure all the marketing activities you do and adapt your tactics if necessary. Consider outsourcing your marketing to an expert if you lack the time and skills to do the job yourself.
CHALLENGE: As a first-time entrepreneur, it’s unlikely you’ll know everything about running a business. A lack of knowledge can lead to avoidable mistakes that could cost your business money. You’ll also need to overcome enormous demands on your time and energy setting up a business.
ACTION: Absorb as much information you can, particularly about the industry that you’re entering, the customers you’re targeting, and the competitors you face. You should also learn about critical areas such as finance, marketing, and sales, so read business advice websites, attend events, join business groups and seek mentors.
It takes a lot of work to build a business, so you need drive and energy. Being self-confident is a bonus. Our free Learn with Start-Up Loans course on entrepreneurial behavior provides detailed insights into what makes a successful business owner.
CHALLENGE: Poor financial planning is one of the biggest reasons start-ups fail. If your costs are greater than the revenue coming in, your business won’t succeed.
ACTION: You need to understand all the costs your start-up will incur and make sure that your products or services are priced appropriately to make a profit. Create a cash flow forecast that predicts your sales as well as your profit and loss. You can then forecast money coming in and going out of your business.
CHALLENGE: One way to manage your cash flow is by securing funding, but raising finance can be challenging and it can be hard to know where to get cash for your business idea.
ACTION: Research the types of funding open to you and gather the information you’ll need to share with investors, such as a business plan and cash flow forecast. Government-backed Start Up Loans provide unsecured funding at lower interest rates than from other lenders.
CHALLENGE: The people you recruit as employees can greatly harm your start-up’s success. A negative employee can quickly damage team morale and productivity. It’s tough having to fire someone but having the wrong people in your start-up can be very disruptive.
ACTION: Your first hire is an important one, so spend time making sure you find the right person. Look for people who share your values and have valuable experience. Once you have a team, create an open and transparent business culture. Encourage clear and open communication with your staff, so you understand their strengths and weaknesses. This may also help you deal with staff issues if they arise.
CHALLENGE: As your start-up grows and you build a team, your employees will look to you for strong leadership.
ACTION: Be clear about your business’s mission and vision. Communicate this clearly to your employees. Employees should understand their objectives, the company’s overall goals and be fully on board with the direction the business is taking. Make sure staff remain motivated and be sure to look after their wellbeing.
CHALLENGE: Managing your time effectively is crucial when launching a start-up. New business owners have to wear so many hats that it can be easy to get distracted and focus on the wrong areas.
ACTION: Planning is vital as it will keep you on track and focused on your goals. You can easily end up working in your business rather than on your business, so dedicate a set amount of time each week to reflect and analyze areas that need attention.
Consider using time-management apps to create lists of tasks you can tick off as you go. If you have an important task to complete, find a quiet area to do it and turn off email, app, and messaging notifications.
Outsourcing tasks is another way to manage your time better. For example, rather than building your website or managing your tax returns, handing it over to a web designer or accountant can be more efficient and cost-effective.
CHALLENGE: Running your business isn’t like having a 9 to 5 job. Without care, it can be all-absorbing and take over your life. You need to take steps to safeguard your mental and physical well-being.
ACTION: Make sure you get enough sleep and take regular time away from work. Have breaks during the day, eat healthily, and get regular exercise. Having a co-founder helps share the load while joining networking events and business groups can give you access to fellow business owners who face similar challenges.