The economy is constantly changing as the markets fluctuate. There are benchmarks you can use to determine your exit from any business. You will find out below. It’s important to find the right balance between working long hours and business success. “Thank God for my customers. Let me explain in detail. No matter how bad the situation is, never lose focus. I want you to venture into the business world and start your own business with a feeling of confidence. When I got to the man’s office the next day, he simply signed a document; handed it over to me and said goodbye. Business owners know how difficult it is to find a hardworking, trustworthy employee. Good customers build your business and bad customers will always try to liquidate your business. You cannot see because that is the secret of the business… the entire world is a big market waiting for anybody who knows the rules of the game.” – Orji Uzor Kalu. Now how can you prepare for what is to come? These business challenges, if not handled properly can ruin your plan to build a successful business. I have said it in previous articles that critical thinking is a key to effective problem solving. “Teams should be able to act with the same unity of purpose and focus as a well motivated individual.” – Bill Gates. Great things in business are not done by one person; they are done by a team of people.” – Steve Jobs. Do you face them squarely or you run and hide? Well; this is where most budding entrepreneurs miss it. They define the process of finding an employee as simply presenting the job description and the right employee will surface. The main business challenge is going to be your ability to forge that opportunity into a business idea. As an entrepreneur, you are the only one that knows business your idea to the core. A microenterprise is a small-scale business that employs a small number of employees—if any at all. Also, operate with a lean budget with low ove… Competition keeps us on our toes and drives us to constantly improve our products and services. Unforeseen Business Challenges and Expenses, “Smooth seas seldom make good sailors.” – Anonymous. 9. Before starting a business, it is advisable to plan an exit. For many small businesses, having a client willing to pay on time for a product or service is a godsend. Despite all the glitz and glamour attached to the word “Entrepreneurship”, it is somewhat synonymous with risks. To avoid this problem, small business owners must either be heavily capitalized or able to pick up extra income to shore up cash reserves when needed. Most brilliant business ideas never scale through the venture capital stage because the entrepreneur is either not prepared or lacks what it takes to raise the needed capital. Most employees want to work less and get paid more. I am writing this piece to enable aspiring entrepreneurs prepare in advance for challenges involved with the entrepreneurial process. I believe with these few examples, my point is clear. A typical example is the Dot com trend, where many established industrial based businesses were wiped out by new web based dot com companies. How Much Does It Cost to Open a Pizza Ranch Franchise. Now let’s fast forward to this day; the third day of August 2011. A small business needs both. Without competition, there will be no innovation and without innovation, the world will be stagnant. Buildings get damaged. A home office is an area in a person's residence reserved for business activities. The complexity of a company’s books increases with each client and employee, so getting an assist on the bookkeeping can prevent it from becoming a reason not to expand. If any of the above questions is currently running through your entrepreneurial mind, then I will advice you read on as I trash out the top 10 challenges you will face when starting a business from scratch. According to a study by Statistic Brain, Startup Business … I don’t know but what I do know is that finding a good business location at the right price is definitely not easy. A team is a necessity for building a successful business. Most people are fond of procrastinating; I am also guilty of such and in fact, procrastination was one of the reasons our business got in trouble. “In the world of business and investing, your exit is more important than your entry. Regardless of your financial or social status; you will never be free from problems. A big part of growing and expanding the business is in taking risks. Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for unpredictable bad weather and thunderstorms, so must an entrepreneur prepared for whatever comes. When I resorted to borrowing cash from family and friends; I was only trying to keep my cash flow position positive, I had to make sure the daily operations of my business continues unhindered and this also implied that I had to make some cut on our daily expenses. It's important to watch changes and trends to potentially identify and plan for an economic downturn. “A good businessman must have nose for business the same way a journalist has nose for news. Bad customers are responsible for bad debts. However, I will give you a brief insight of what I faced recently, how I overcame and the lessons I learned. Instead focus on what works and is … Those words hit me like thunderbolt. Please before you apply any of these exit strategy, I will advise you consult with your attorney or legal adviser. Don’t focus on the risks and challanges because the possibilities are infinite. But to pull myself and business out of the mess, I knew I had to tackle the problem head-on and I did. These include things such as hiring the right people, building a brand, developing a customer base, and so on. In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.” – Rich Dad. Well, some will attribute such action to luck but I will say it’s God at work. Whether a service or a product, at some point a business must sacrifice in order to scale up. All of that risk is transferred from the larger company to you and your employees. He is the Executive Producer @JanellaTV and also doubles as the CEO, POJAS Properties Ltd. 27 Action Checklists for Starting a Business from Scratch, 5 Practical Steps to Starting a Business for Kids, How to Avoid Business Failure and Overcome If It Finally Comes, 20 Best Tips on How to Get a Distribution Deal for a Product, 20 Tips for Starting an Online Business at Home as a Teenager, How to Become a Self Made Millionaire in 5 Years With No Money, 20 Tips on How to Work from Home Successfully and Effectively, 50 ideas on How to Start a Business at Home With No Money, successful entrepreneurs and drop out billionaires, Unforeseen Business Challenges and Expenses, Keeping Up With Industrial Changes and Trends. Competition is the next challenge you will face when starting a business. Fatigue can lead to rash decisions about the business, including the desire to abandon it completely. How Investors can Perform Due Diligence on a Company, The Small Business Health Care Tax Credit, go into business without considering the challenges ahead. Even when a business is not founder dependent, there comes a time when the issues from growth seem to match or even outweigh the benefits. This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. Rewarding challenges, but harsh challenges nonetheless. The competitive environment … Most brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as an individual. In fact, I spent most of my free time alone to the extent that my dad became concerned over my health and began counseling me to take things easy. This may mean not being able to personally manage every client relationship or not inspecting every widget. If you get hit by a car, is your business still producing income the next day? Bad customers will always try to exploit the company’s goodwill and look for ways to rip off the company. You will have to give up administrative role to assume the role of a watchdog. Stand tall; keep moving your business forward and I will see you at the top. Unfortunately, this can result in a longer-term handicap, because, even if you have employees and so on, you may be still acting as a subcontractor for a larger business. Now finding a business team is just the second hurdle, transferring your passion and vision to your team is the next piece of cake. Don’t wait till you are under pressure before you act. I told them that a mistake has been made and I was not interested in trading blames at that moment; all I needed was a solution and my team responded positively. What I see, you may not see. I am writing this for those who are currently experiencing hard times in business and life in general. My business was on the brink of collapsing and here was this smart looking guy telling me I can’t access my money. Playing on the safe side will only take you that far but it would not prove if a business or an idea is successful or not.However, accidents happen. A small business owner should not create a situation in which the business could not continue in their absence. If you want to achieve much in business; preserve the integrity of your name. Instead of praying never to encounter challenges; the question I constantly ask myself is “how prepared am I to handle the next challenged? … Seasoned entrepreneurs know that trend is a friend and are always willing to swiftly adjust their business to the current trend. I get my own fair share of problems everyday but just recently; I was hit by a massive setback. An exit strategy is very important to the long term survival of a business. You must know how to pitch angel investors and venture capitalists alike. Now you may want to know what transpired within these four months but I think this should be a story for another day. I was practically running on adrenaline and living on edge within these four months. Your strategic business team should comprise your banker, financial adviser, accountant, attorney or legal adviser and any other specialist that will be of tremendous impact to your business. To every profit, there is a corresponding risk to be taken. Starting a Business. Finding good employees is a minor task compared to the business challenge of forging your hired employees into a team. unexpected costs, lower than expected sales, failure to secure distribution)The probability of the risks happening (this has to be an estimate)What would happen if the risks … But you must be warned. The unique thing about this type of exit strategy is that while you are selling your business (in form of shares) to public investors, you still maintain control over the business. The long and arduous nature of setting up a … Business conditions change continually, so your market research should be continuous as well. Remember the story of the customer that sued McDonald’s claiming the coffee was too hot. The period April to July 2011 was one of the toughest in my life. Don’t wait till tomorrow because it might be too late. To counteract economic risk, save as much money as possible to maintain a steadycash flow. This arrangement can work if your main client has a consistent need for your product or service. This man don’t even bother to know the name or identity of who he was helping. now how do you plan an exit strategy? “If you want to know the value of money, go and try to borrow some.” – Benjamin Franklin. It is also the duty of an entrepreneur to bring solutions to other people’s problems. “The ability to sell is the number one skill in business. Sometimes, challenges or problems come so fast that you lose your grip. However, there are some that are strictly small business problems, ones most large companies grew out of long ago. Unfortunately, it is usually that level of personal engagement and attention to detail that makes a business successful. But I laughed him off and quietly explained to him that I wasn’t worrying, I was thinking. Now how did i survive this trying period? Entrepreneurs face multiple risks such as bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. I had a good experience of this during the hard time. 10 Challenges & Problems of Starting a Business from Scratch 1. Most investors want to invest in already established businesses with minimal risk and they want to be sure that they get returns for the risk they took. “How fast a company can respond in an emergency is a measure of its corporate reflexes.” – Bill Gates. Finding a good employee who will be passionate about delivering his or her services is quite difficult. If costs are … You are the only one that knows the story of your future. My business suffered a major cash flow crisis as a result of this single action the bank took, so I resorted to borrowing cash from family and friends to keep my business afloat. A wolf will never hunt alone; it hunts in packs because it knows the power of team work.” – Ajaero Tony Martins. You will have to figure it out yourself or better still, you can consider bringing them on board as partners. Finding the right business opportunity or creatively developing an idea is certainly not an easy task. “Starting a business is like jumping out of an airplane without a parachute. Most writers and managers crank up the process of finding good employees as an easy task. Risks and challenges of doing business internationally 1 – Unknown trading partners. Well, you will have to figure out yourself. As an entrepreneur, you are bound to have strengths and weaknesses. By July, I was deeply in debt. When challenges hit you; don’t break, Challenges are part of life; they come to make you stronger only if you refuse to bow. The ease of starting a business creates a much broader level of competition. Companies that give extra flexibility to their employees will have the edge in this area.” – Bill Gates. But if not, and you dream of becoming one someday; then I think you will find this article worthwhile. A good customer will be loyal to your company and will be willing to forgive you if you make a mistake and apologize. Let me give you some practical illustrations: “If you want to be rich, you need to develop your vision. Again, there numerous risks associated with starting a business. In places where people see a lot of obstacles, I see a lot of opportunities. The strategic risk is the business risk that your business strategy might actually become too rigid and no longer efficient in shooting your business to its desired level; your business then starts … Another challenge you must expect is an unforeseen increase in business expenses. Growth should never be the enemy of quality. If I do not fire bad customers, not only will my good customers leave but many of my good employees will leave as well.” – Rich Dad, “In business, the competition will bite you if you keep running. The Bottom Line Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. Stick with what you believe in.” – Trip Hawkins. Developing the Vision and Business Idea, “To have a great idea, have a lot of them.” – Thomas Edison. Today, the Airplane is a reality. Entrepreneurs have a tendency to find new ways of getting into trouble very quickly. Once your eyes, ears, nose, heart and brain are trained on business, you sniff business opportunities everywhere. Financial Risks. The bible said that “a good name is better than precious ornament” and that’s definitely true. Here's how to do that for individual stocks. There are many standard challenges every business faces, whether they are large or small. My dad probably never understood the difference. If you cannot sell, don’t bother thinking about becoming a business owner.” – Rich Dad, “Eagles don’t flock, you have to find them one at a time.” – Henry Ross Perot. What’s more, every day will bring its own fresh challenges, especially when you’re new to the business world. And the total was greater than the sum of the parts. If you want to start and grow into a successful catering company, then there are certain challenges you should expect; i mean challenges … Just as you fire employees, you must also be prepared to fire bad customers without hesitation. A football team may have great skillful players but if they fail to play as a team, their possessed skill is useless. This piece is about a recent business challenge I encountered, how I solved it and the lessons I learned from the experience. But at the same time, it is also fraught with high-stakes risks. In this case, the business still belongs to you but you are not involved with its day to day affairs. It’s not easy being at the helm of affairs; it’s not easy being a business leader. Most entrepreneurs run their business without any plans to exit and even if they have an exit strategy, they find it difficult to implement it. Keeping your eyes open to spot trends is really a challenge but the big task will be your ability to quickly use the trend to your advantage. “Always start at the end before you begin. Diversifying your client base is vital to growing a business, but it can be difficult, especially when the client in question pays well and on time. Developing a vision is definitely a business challenge because an entrepreneur must sometimes assume the role of a sorcerer. If you do not get rid of your bad employees, the good employees will leave. I remember going to the bank to meet with my banker. Whether you’re … But I think it’s more than that. The real bone of contention is whether you will survive or not. “Without the element of uncertainty, the bringing off of even, the greatest business triumph would be dull, routine and eminently unsatisfying.” – J. Paul Getty. Starting a business has never been more exciting. Understanding the challenges and risks of starting a new business 1. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. As a final note, I want to state clearly that challenges come only to make you stronger; so don’t faint in the face of challenges. When you exit in this manner, you will have more free time to look at other projects or retire. Countries and emerging markets that may offer considerable opportunities for expanding global businesses may … As I bow my head lost in thought, I noticed someone by my side. When I talk about a team, I am not talking about regular employees. All I just want to say is this; “I survived.” As at today, I have cleared all outstanding debt I incurred within the hard times, my bank account has been restored and my business has roared back to life. “A business has to be involving, it has to be fun and it has to exercise your creative instincts.” – Richard Branson. Change in trends is a challenge you must be prepared for when starting a small business. One of the biggest is liability risks. Understand the risks associated with your business and plan for them.Insurance helps. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business. It’s your duty as an entrepreneur to make sure your team sees the future you see. When the Dot com era began, business owners were left with only two options. In the month of May, my business suffered a major setback and in June; my bank placed a hold on our business account (meaning we can’t make withdrawals from the account) due to some differences that needed to be reconciled. Just like a famous politician said; “when vultures surround you, refuse to die.”. Must an entrepreneur face these business challenges when starting a business? Here are five of the most common ones to consider before jumping in feet first. Well, like I said earlier; all problems will surely come to pass. Even though I have solved this particular problem, I know bigger problems are still lying ahead of me. So if you are still eager to profit from my experience and foolishness, then read on. I wasn’t interested in the sermon and big words he was spitting out; all I wanted was a solution and just when I thought a solution was forthcoming, my banker said “I am sorry Mr. Ajaero; we still can’t allow your company make withdrawal from the accounts.”. Developing the Vision and Business Idea. Exiting your business this way means that after the sale and transfer of assets is complete, you have nothing to do with the business again. Entrepreneurs must plan … I know you can never be too prepared for what’s ahead since you can’t predict what is to come; but at least, I believe that he who is prepared has half won the battle. Everyday, I keep receiving accolades with respect to my achievements; yet deep down inside of me, I know success is not what it’s painted to be. III. You can choose to exit a business in any of the following ways: a) Turning over the business to professional managers. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible. It is the duty of an entrepreneur to bring into present what is yet to be. b)  The Wright brothers envisioned a flying machine but they were massively opposed because the thought of humans flying was perceived as impossible. A good thumb of rule is this; exit before you enter.” – Robert Kiyosaki. The first risk that comes with expanding outside of Australia is having to deal with... 2 – Cultural barriers. The only question is whether we will make them obsolete or somebody else will.” – Bill Gates. How do you get a location that has a rapidly growing population, good road network and other amenities at a good price? What do you do in the face of problems? But it took me and my team, 90 days of untold stress to bring things back to order. When building a business from scratch, you are going to face the challenge of determining your exit strategy. Competition can make your business lose its relevance in the eye of your customers so you must always be on guard. To every advantage, there is a corresponding disadvantage. You've probably encountered a definition like this: “blockchain is a distributed, decentralized, public ledger." I see competition as a welcomed challenge and I want you to do the same. They thought I was going to axe someone but I didn’t. And if you have an online business startup, the competition gets tougher. If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Good customers are really hard to find. Starting a Business There are a massive 16 procedures to navigate when starting a business in the Philippines, taking an average of 36 days to complete. Never make empty promises and when you eventually make a promise; keep to your words. Knowing your exit strategy is an important investment fundamental.” – Rich Dad. While others see problems, you must see opportunities. They must believe in your possibilities and must also be passionate about making that possibility a reality. A new business requires proper planning, for one thing. c)  Back in those days when cars were custom made and exclusively for the rich, Henry Ford envisioned affordable cars for the masses. In addition to the risks of failure, your business does represent quite a few financial risks, including failure, to you and your family. That single vision made Henry Ford one of the richest men in history. Developing a business idea is usually the first challenge faced by every... 2. If you are an entrepreneur, then I believe you will be familiar with the challenges associated with the entrepreneurial process of building a business from scratch. However, it is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying. “Business and investing are team sports.” – Rich Dad. Bad customers will always look for loopholes in the company’s policy to exploit and make a few gains. You may have great employees but if they can’t act as a team, they are worthless and will yield nothing but stagnation. Professional investors always have an exit strategy before they invest. Call it my survival write up and you won’t be wrong. “Bringing together the right information with the right people will dramatically improve a company’s ability to develop and act on strategic business opportunities.” – Bill Gates, Employees are your representatives to your customers and the outside world. After developing your idea, the next challenge you are going to face … Just as my mentor, Robert Kiyosaki says: “The world is filled with brilliant ideas and excellent products but the world lacks seasoned entrepreneurs.” – Robert Kiyosaki. When the problem began, I had every right to point a finger to any member of my business team and say; “it’s your fault.” After all, i am the boss. The process of building a business team starts even before the issue of raising initial start-up capital arises. The challenge: You want to grow or start your new business endeavor, but you’re facing difficulties for financing for new business owners. Machinery breaks down. Rather, I preached the need to jointly assume responsibility and resolve the mess together; with me as the lead dog. This single incident made me wonder the amount of pressure top business leaders and CEOs go through during challenging periods. A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. Political risks An obvious risk for international business is political uncertainty and instability. “He that is prepared has half won the battle.” – Chinese Proverb, “The biggest challenge you have is to challenge your own self doubt and your laziness. I call “Envisioning the idea” the first true task of an entrepreneur. When I heard this; I was humbled and I strived to make sure I didn’t disappoint. Understand the potential opportunities and risks in a new business … But I didn’t do it. There is more to raising capital than just simply asking for money. “Individuals don’t win in business, teams do.” – Sam Walton. How did i keep my body and soul together? Learn what an entrepreneur is, what they do, how they affect the economy, how to become one, and what you need to ask yourself before you commit to the path. This is the final lesson I learned from the whole scenario; always be prepared for the worst. I call it the entrepreneurial process of “Creating Value out of nothing”; a process that brings innovative products into existence. Examples of such benchmarks are: Now when it comes to exiting a business, there are three strategies you can apply. I did not run into a hole and hide; rather, I placed myself in front of my team. That is the more reason you need a business team to cover up or compliment your weaknesses. Below is an illustration of how the process goes. Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. Problem Solving and Risk Management. That single vision made Bill Gates the richest man in the world and Steve Jobs the most famous business person of the 21st century. How do successful entrepreneurs and drop out billionaires handle and solve problems in business? Developing a business idea is usually the first challenge faced by every entrepreneur when starting a business from scratch. So when it seems all hope is not, never forget to cry to God for help. The third business challenge you will face in the course of starting a small business from scratch is assembling the right business management team. “My model for business is the Beatles. “You are nuts and you should be proud of it. “There is far more opportunity than there is ability.” – Thomas Edison. Rather, toughen up. The sixth challenge you will face in the process of starting a small business from scratch is finding good customers. One of the greatest mistakes you will make in times of hardship is to take your eyes off your goal. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Most individuals are comfortable with the present way of doing things but it is the duty of an entrepreneur to envision and forecast the future. List all your business and personal risks - some risks can be expressed in dollars while others are impossible to value. Certainly not an easy task as I write this now here was smart... 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