Starting a small business from scratch is one of the most rewarding and satisfying things you may ever do. It all starts with a loose idea for something that you think you could sell. Then, there’s a period with a lot of maths and uncertainty where your idea starts to come together as something real and tangible. When you make that first, slim profit margin, it’s the best feeling in the world! While starting a successful business is certainly satisfying, it’s by no means easy! You’re going to run into a wide range of different challenges along the way. Here’s a guide to the kinds of challenges you can expect, and how to get around them.
We’ll start this off with the most surprising challenge that you’re going to have to tackle at some point: integrity. You may not think it, but these days, start-ups face far more moral challenges than any previous generation of business. It’s 2016, and now that we’ve made it to the other side of the recession business is more accessible than ever. Leaps in technology have meant that skilled individuals are looking to work at companies from all over the world, and this has created a fairly intense, fast-paced business arena. Everyone’s going to be striving to keep their job, be more successful and get that big raise. Similarly, you’re going to be scrambling to hold onto your place in the market, and doing anything you can to keep your competitors one step behind you. This kind of culture can easily lead to cutting corners, omitting a few little pieces of information or even lying outright! No matter what you’re selling, you need to have a certain degree of trust existing between you and your employees, and all of your partners. Without this, your business will fail to function and inevitably fail.
Capital and resource management is another big challenge which you’re going to find out about. I’m sure you’ve heard that old maxim “money makes the world go around”. It’s not really surprising that this is more true in the modern business arena than anywhere else. There have been countless hopeful entrepreneurs who were brimming with great ideas, but fell short when it came to resource management, and had to watch their ventures collapse. Sure, you might have a good-looking profit margin on your financial statement. However, if your expenditures and receivable collections are too much of a drain on your capital, then your business won’t be able to make it far. Far too many start-up owners fail to focus enough of their time on generating a healthy cash flow, and their whole business plan falls apart because of it. In order to avoid this problem, you have to build up some pretty hefty cash reserves; enough to deal with and unexpected losses and emergencies if and when they come up. These kinds of emergency coffers are especially important when the economy is in a bad shape. In the last recession, cash was flowing into all businesses, and creditors are far less lenient in extending their time to pay.
Rapid scaling is another big challenge that many modern businesses are facing. You may think I’m talking about the difficulty of instigating rapid growth in your business. In fact, the real problems come up when you actually do grow rapidly. If you expand your business too quickly, you may find that your monthly expenses are greatly exceeding your operational credit, and end up floundering to keep up with customer demands. If you find yourself in this position, you may find that you become rapidly popular, and suddenly lose all that renown. When your capital is stretched like this, you’re pretty likely to run into some big HR problems as well. If you’re pushing your business into all kinds of new areas, and spending so much money that you’re barely able to meet your paycheques, it won’t go unnoticed. No employee wants to work for a business that’s in danger of going under, and you may find that even your most senior managers will be preparing to find another job. Furthermore, if your business grows from ten employees to a hundred in the space of a week, you’ll find yourself pretty disconnected from the daily, nitty-gritty operations. This can make all kinds of factors feel more complex and harder to manage. You can find out more about the challenges of rapid scaling by checking out this Forbes interview.
Perhaps one of the biggest threats to any start-up in 2016 is… well, other start-ups! As I mentioned before, it’s now easier than ever for average people to turn an idea into a fully functioning business. We’re past the days where it took countless forms, and a few months of liaising with various investors to get a business up and running. Now, you could open another tab right now, buy a domain name, register your company, and start trading. Okay, maybe it’s not as straightforward as that. However, the point still stands that starting a business is more accessible than ever. While this means that it may be easier to see your idea turning into a reality, it also means that you’ll have more firms muscling in on your target market! No matter what product or service you’re selling, you’re sure to find countless competitors trying to be better than you. When the modern customer base can choose another business with the click of a mouse, staying on top of your market is harder than ever. Your two main options are to invent a completely new product and to pursue your marketing campaigns fiercely. This brings me onto my next point…
Marketing yourself, and retaining loyal customers, are also extremely challenging for new businesses in 2016. Just like my point about increased competition, the modern accessibility of effective marketing is something of a double edged sword. These days, almost everyone has access to a wide range of communications channels, and this has made it much easier for any new business to get the word out. Yes, getting your business seen by your target market is now a complete breeze. However, you’re only going to be a drop in an ocean, and you’ll have to draft a killer marketing strategy to make it through those first few months of trading. Ask yourself what kind of marketing channels your target market are going to be using the most, and what the best tone for reaching them is. Once you actually convert these customers, you’re met with a whole new challenge. They’re going to be surrounded by your direct competitors, and you’re going to have to work hard to keep them loyal. This isn’t helped by a current culture which has whittled away at good old consumerism. Although the global economy is picking up, a lot of people are still being very careful with their money, and as a result businesses of all shapes and sizes are suffering from a deficit of new customers. These days, knowing what your customers want and being able to provide it to them better than anyone else is extremely important. Check out this HubSpot article for more.
Finally, finding the right staff for your operation is another big challenge which you’ll have to tackle fairly early on. Talk to any experienced business owner, or even an HR executive, and they’ll tell you that one of the most significant challenges they face is finding staff who are the right fit for the job, keeping them on board, and encouraging them to buy into the vision of the business. Unfortunately, if you’re looking for any miracle cures for this kind of issue, you’re out of luck. A business, especially one that hasn’t been operating for long, is like a family. Just like families, the business can be close-knit or highly dysfunctional. If you had hundreds or thousands of employees working under you, then managing your staff would be largely political, and a simple matter of recruiting people with the right qualifications and experience. However, when you’ve got one office and a handful of employees, it’s more to do with personality and skill. In such a small operation, every employee’s personality can have a profound effect on the productivity and culture of a business. Until you have the resources and means for a full HR department, you’re going to be in charge of managing this mesh of people. You need to figure out how to deal with all the different personalities in the office, but most importantly what drives individual workers to succeed. Once you can isolate this factor, you won’t have to do much else to get the best possible work out of your staff. On the more technical side, you may find general recruitment harder than you expected. Unemployment’s down all over the world, and now various high-tech skills are in high demand. If some individual has a particularly impressive CV, you’ll need to work pretty hard at convincing them to come and work for an unknown start-up rather than some corporate giant. Check out this Business News Daily article for more.