5 Most Common Challenges Every Starting Entrepreneur Faces

Startups

5 Most Common Challenges Every Starting Entrepreneur Faces

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It’s no secret that starting a business is a daunting task. Prospective entrepreneurs face an untold number of challenges when first starting their businesses. Some common, and some not so much, entrepreneurs must find ways to overcome these challenges to get their businesses up, and running.

But overcoming challenges is easier said than done. If it were that easy, everybody would be a business owner. Nonetheless, these challenges exist, and entrepreneurs must overcome them. But that begs the question, what are the most common challenges that prospective entrepreneurs face? 

5 Challenges Every Entrepreneur Faces

5 Challenges Every Entrepreneur Faces
5 Challenges Every Entrepreneur Faces. Image via Investopedia.

We live in an ultra-competitive business world where there’s always a competitor waiting to bite a chunk of your business. The slightest mistake could mean disaster for your business. So entrepreneurs must be ready to tackle each challenge with vim, and vigor.

That said, prospective entrepreneurs with no prior business experience must familiarize themselves with the most common challenges in the field. 

So, that’s why we’re presenting you a list of the # challenges. Let’s start.

Challenges Every Entrepreneur Faces
Challenges Every Entrepreneur Faces

Funding Challenges

Every business needs starting capital. Unfortunately, money is often the most common issue with prospective entrepreneurs. Money issues force entrepreneurs to turn to outside means for funding their businesses. This means entrepreneurs will turn to friends, and family to secure funding to launch their businesses. 

If that fails, they will turn to banks, venture capitalists, and seek funding by offering a stake in their business. While this sounds like entrepreneurs have plenty of means to fund their businesses, the challenge emerges when entrepreneurs don’t want to give a percentage of their business.

As one might imagine, hassling with venture capitalists, and going back, and forth is an issue in itself. 

Coming out on top is the least likely outcome when dealing with an experienced capitalist that sees potential in your business. Therefore, funding is, and always will be one of the most common challenges entrepreneurs face. 

Market Challenges

In modern business, there will always be someone else to take over from you. So another challenge entrepreneurs face when starting their businesses is the numerous market challenges. 

From competitor analysis to market conditions, and demand, analyzing the market as a whole is a top priority for prospective entrepreneurs. Being ranked so high on our list of challenges means there’s plenty of ground to cover.

Entrepreneurs must overcome a series of sub-challenges that will provide the answers to the most crucial questions.

Namely, analyzing the market will tell you if there’s a demand for your product or service. In addition, it will outline your competitors, and their products, and help you determine whether you have a superior product.

Since you’re looking to enter a new market, and establish yourself as a player, you must do your due diligence, and determine if your product or service can solve a problem.

Hiring Challenges

You can’t be a successful entrepreneur by yourself; you need people around you to pick up the pieces you cannot. Hiring talent is always an issue with new businesses, as hiring the wrong people often means disaster. 

However, herein lies a mistake every prospective entrepreneur must avoid: overhiring. Hiring, and overhiring can put you out of business by quickly burning through your capital. Entrepreneurship 101 tells us that you need to put in the hours so your business can survive, and eventually thrive. 

But you do need help. The kicker is knowing how much help you need. You obviously need to fill slots for positions in which you have little to no familiarity, and experience. For example, every business needs an accountant.

And, if you have no prior accounting experience, the clever move is to hire a person for the job. 

But you certainly don’t need two accountants for the job, at least not now. So be clever in approaching the issue, and only hiring when there’s a need for that position to be filled. 

Legal Challenges

The last thing you want is to mess with the law. While this doesn’t mean you’ll be doing criminal activities, every business must comply with numerous legal requirements.

Among these include obtaining licenses, and permits, filing taxes, and other legal obligations that every business must adhere to. It’s no secret that different legal challenges apply to various industries, locations, and types of business. So many of these might not specifically apply in your case. 

But every business must adhere to a series of legal obligations. For example, you will mention data privacy regulations such as GDPR, and CCPA, depending on where you’re doing business. GDPR is for European markets, while CCPA is for the American market.

Failure to comply with data privacy regulations will result in hefty fines, and even the closing of your business.

To ensure the challenge is manageable, prospective entrepreneurs must hire the right person with legal understanding to spearhead the process. 

Scaling Challenges

Scaling the business isn’t something entrepreneurs will come across when they first start. Instead, it’s a challenge that will remain in the shadows in the foreseeable future. According to Forbes, premature scaling is why 70% of startups fail.

Ideally, you want to avoid finding yourself amongst those 70% that miscalculate their scaling strategy. So what’s the solution to this highly common challenge? The answer is to develop a scaling business model. But herein lies an even more significant challenge; not every business has an easily scalable model. 

Ideally, entrepreneurs should have a clear revenue model, pricing strategy, and customer acquisition plan in place to be ready to scale when the time comes. 

Conclusion

Starting entrepreneurs must familiarize themselves with the numerous challenges that can quickly consume them, and destroy their businesses. Therefore, entrepreneurs must plan beforehand to avoid these problems. Some of the most common challenges range from funding issues to avoiding premature scaling.

By planning, and putting the necessary safeguards in place, starting entrepreneurs can put themselves in the best possible position, and prevent these challenges from becoming costly issues.   

 

Author Bio

Erik Bergman picture
Erik Bergman picture

Erik Bergman co-founded Catena Media, and helped grow it to over 300 employees, and a $200 million valuation before stepping away to start Great.com, an iGaming organization that donates 100% of its profits to environmental charities.

In addition to running a successful online business, Erik also hosts the Becoming Great podcast, shares entrepreneurship tips with his more than 1 million social media followers, and contributes to sites like Entrepreneuer.com, Business Insider, Foundr, and Forbes.

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