What are the main challenges an entrepreneur faces when starting up a business?
I am an entrepreneur in high school and I plan to have my business up and running by the end of this year. However, I want to know the main problems that entrepreneurs face so that I am better prepared to handle them when they cross my path. #business #entrepreneurship #startups
Great question. I'm basing my answer off my experience building a technology startup. I won't try to highlight all of the challenges, because there are too many for any single person to relate. I'll focus on the four biggest challenges I have faced over the past year.
First challenge: Doubt
At the beginning, building a business is exciting. That's when most people tell you you're doing the right thing, and all of the forecasts you create show you becoming a millionaire in no time. It's when the first potential customer says "No way, why would I want that?" that you have to face doubt. Until you have dozens of employees and have been operating for several years, the entrepreneur IS the business. Doubt will kill your personal mental drive, and as a result, it will kill your business. Fight against self-doubt. That doesn't mean you should blindly pursue impossible goals, but don't allow irrational self-doubt to cloud your quest for success.
Second challenge: Product-market fit
It's hard to find a good market that has a problem and money to pay for a solution, and then to match that market up with your product in a way that fits perfectly. We call this "product-market fit". The thing that makes it particularly hard is that there aren't often clear signals telling you when you've got product-market fit or not. It takes a lot of experimentation with product design, pricing, distribution, etc. before you really have something that PERFECTLY fills a niche that needs to be filled. This is what entrepreneurship is all about. I don't know all the answers on this, but I'd recommend reading "The Lean Startup", which is a book that talks a lot about product-market fit.
Third challenge: Recruiting
There aren't many businesses that will operate on the back of one single student. You have classes to attend to, and one person can only do so much. You need help. That means you have to convince other people to join you in your project. But recruiting is a significant challenge. How do you motivate people to join you in achieving your vision? How do you make sure you're getting quality people? Overcoming this challenge means building your leadership skills. It's one of the hardest challenges, which is why I put it into my top four.
Fourth challenge: Capital
Capital is money. You need capital. Your business needs capital. If you don't have capital, you need to get it, and until you have it, your business is on life-support. How do you get capital? Sell something. Earn some funds and keep them in the business. Get investors to give you capital. Find someone with capital and convince them to co-invest in your business. Borrow money if you have to. Protect your relationships with the people who loan you money or invest with you - always pay them back on time. You need them (and their networks) to be there to support you with more capital for the rest of your life, so always treat them well.
There are many other challenges first-time entrepreneurs face. You're doing the right thing by asking.
In addition to what Jared mentioned, here are my 3 key challenges entrepreneurs face when starting their own business:
- Finding the right team members
LinkedIn's founder, Reid Hoffman, says he evaluates start ups based on the company's second hire. Why is this important? The second member of the team is the anchor who defines the work ethic, culture, and personality of the company. It's often very difficult to find the right members who fit in the organization - from a talent/skills perspective to how well they "fit" in with the company's culture.
With hundreds of thousands of new business ideas, only so many can receive funding from venture capital firms. You must have the right team, the spot-on business idea, and leverage in your respective industry in order to be noticed by angel investors, VC's, etc.
Often times, companies try to solve different types of problems and come out with too many solutions - instead of honing in on one particular pain point, companies lose focus on what they're really good at, and spread themselves too thin.
Hope this helped!
The reasons given by most of the writers are absolutely right in someway or the other. You should focus on getting the basics right. Rest everything will fall in place as you move along.
Here's a great article to give you some insights - https://www.entrepreneur.com/article/254721. I think it's great you are already anticipating potential challenges in order to come up with solutions. I would also think about scale - how quickly do you want to grow your business and what do you think is manageable? Good luck with your business!
To add to the great advice you've already received, I would suggest:
Read as many Entrepreneur books and current magazines as you can. Start a notebook or Evernote note with the most valuable advice and tips you read; you'll be surprised how much you'll use a reference tool that YOU create from various sources.
Go interview 10 entrepreneurs....some you know and some you don't. Try different industries, sizes, and length in time in business. Ask them your toughest questions and send hand-written thank you notes full of gratitude and asking to stay in touch. No one will build your mentor network, so you will have to.
Find a good CPA/Accountant from a trusted referral and get their initial advice BEFORE you ever file paperwork to start a business. This one tip saved me thousands of dollars and headaches when I started my business. You want their guidance before you take the first step. Mine gave me a step-by-step checklist of what to do in my first 60 days.
Reach out to SCORE.org to get free advice from retired executives.
You must test your idea, product, or service in the marketplace before you invest too much time, money, or energy. You need proof of concept. New innovative ideas change the world, but if there is absolutely no competition or no one doing what you plan to do, it could also mean it's been tried and there's no market for it. You must determine which yours honesty is without rose-colored glasses.
Be mentally prepared for long days, disappointments, feast-or-famine periods, exhaustion....really try to prepare for as much unexpected stuff as you can, Make a list of potential barriers to success and write out solutions to overcoming those barriers should they arise.
Take care to not sacrifice critical components of success trying to achieve success: proper nutrition, regular exercise, significant sleep, maintained relationships, family, recreation/play, meditation/prayer/alone time/whatever you do to "center" yourself. These are the most common pitfalls I see new entrepreneurs make and they can destroy your business, your health, your personal life, and your sanity.
Live with faith and tenacity that you CAN, indeed, do it!