8 Common Challenges Entrepreneurs Face

1. Deciding what to sell

Probably the biggest challenge of entrepreneurship is figuring out what
kind of product or service to offer. It’s not an easy question because
getting it wrong means your business will fail no matter how well-
designed and set up it is.
Entrepreneurs must understand the customer who is likely to purchase
their product, what market they are seeking to serve, what the
competition looks like, what they could offer to give themselves a
competitive advantage, if their target market is large enough to
support the product, if their target market is too broad, and a host of
other issues.

How to overcome it: Self-assess and research

There’s only one way to deal with this challenge: diligent research. You
must come up with a detailed business plan that you can defend to any
potential investor or partner. Your research should describe your target
market in great detail and offer realistic plans for how you will become
profitable -- not pie-in-the-sky predictions based on nothing more than
hope.
You also have to assess yourself to determine if you have the energy to
pursue this idea to fruition and whether you have the right skills and
strengths for the job.

2. Marketing
To paraphrase sales guru Grant Cardone, if people don’t know you, they
can't buy from you -- not won't buy from you but can't buy from you.
Marketing introduces you and your brand to customers so it is possible
for them to even consider buying your product and service.
But marketing is a challenge for entrepreneurs because oftentimes
they’re strapped for cash, and building a brand through marketing can
be expensive with no immediate benefit early on. You’ve got to decide
how to market your product or service -- choose from mobile, social
media, or print -- and determine whether it’s wise to work with outside
agencies.
How to overcome it: Test and examine
When you’re starting out lean, you must figure out where your
marketing money will get the most bang for the buck. Start small with
free social media platforms and try out a few different approaches.
Consider broad, more capital-intensive approaches based on some of
the results you see. Always start with a small marketing effort and
collect extensive data and business metrics on various approaches
before jumping in with both feet.
3. Hiring talent
Entrepreneurs who want to expand must find help. At a certain point,
you can’t do it all on your own. But finding the right people is a big
challenge, especially early on before you have your own human
resources department and processes.
You must learn how to identify what type of people you need, how to
evaluate them, and how to integrate them into your business so they
are vital parts of your organization rather than “gofers” who need
constant direction. You must invest time in reviewing credentials and
candidates, or employees may actually hinder success.
How to overcome it: Narrow your focus
Develop a specific description of the role you’re hiring for and a
detailed breakdown of what skills and personality attributes you need
for the position. Then start vetting applicants, checking each box to see
how many of these attributes they meet so you can compare them
later. Considering using outside headhunters to take over the process.
4. Delegating authority
It’s not good enough to hire a bunch of people -- you must properly
delegate work and responsibility to them. As an entrepreneur, the
temptation is to try to do everything yourself, but this is not productive
and will limit your company’s growth. Strike a balance between
monitoring the business and trusting others to accomplish objectives.
How to overcome it: Learn to trust
Give your employees clear roles and responsibilities, as well as rewards
for meeting certain benchmarks. Make them stakeholders in your
company’s success. Avoid micromanaging people and processes. Give
people the space to use their talents and only step in for minor course
corrections. Be patient with others -- and with yourself.
5. Managing time
While it may seem like money is constantly in short supply, time is the
only thing that will always be limited. Entrepreneurs must make sure
their time is spent on the most important tasks, and they must avoid
spending time on tasks team members can do. By freeing up this time,
they can focus on the bigger-picture issues, such as how to take the
company in a direction for growth.
How to overcome it: Be organized and delegate
Identify tasks that can be delegated and then delegate them. Resist the
urge to do them yourself because you know you could do it perfectly.
Trust your team members -- they will surprise you with how much they
can get done and how well they can do it. Focus on your own strengths
and let others handle everything else.
6. Guarding cash flow
Cash is always running for entrepreneurs, so you must guard it
carefully. It’s a challenge to ensure revenue is consistent and can
always cover costs and payroll. The last thing you want to do is start
paying employees late because you didn’t plan cash flow properly,
which can have ripple effects on the morale of your staff and their trust
in your company and leadership.
How to overcome it: Budget and plan
Entrepreneurs need an effective billing system in place and good
record-keeping, which is where accounting software can save the
day. This software can account for all costs and help entrepreneurs
promptly invoice for service and products. Consider working with an
accounting professional if you need extra help in this area -- it’s that
important.
7. Finding capital
Before they even get to worry about cash flow issues, an entrepreneur
needs capital to get off the ground. This is one of the most significant
problems faced by entrepreneurs, particularly those striking out on
their own who aren’t well-connected to angel investors with deep
pockets.
Without enough financial resources to start your business, it will be
doomed to fail. You will need capital for space, equipment, or to
develop and produce your product.
How to overcome it: Be resourceful and aggressive
Just like you must be a good salesman to get customers to buy your
product, you must also market yourself and your company to
potential investors. Consult with banks and investors in your area, or
look to public platforms like Kickstarter. Consider approaching family,
friends, and associates seeking investment or for connections to
someone who might be willing to invest.
A word of caution on taking money from friends and family, however:
That money will affect your relationship if things go south, so be very
careful before taking this route.
8. Projecting confidence
Becoming an entrepreneur seems fun and exciting, and sometimes it is.
But most of the time -- particularly early on -- you’re constantly battling
self-doubt. Do you have the confidence it takes to be
an entrepreneur. Are you able to shake off feelings of the imposter
syndrome?
Unless you are brimming with confidence and have the spirit to fight
through adversity -- because you will face significant obstacles you
can’t foresee -- you will struggle as an entrepreneur and will likely quit.
How to overcome it: Believe in your skills and vision
One way to deal with imposter syndrome is to remind yourself that,
even when you’re failing, that’s never true. You have skills that are
valuable, and your persistence and hard work is admirable and
something most people aren’t even brave enough to attempt.
Seek support and advice from other entrepreneurs to get you through
the tough times. And don’t completely bat away feelings of doubt.
Sometimes they open your eyes to problems that you need to fix, so be
honest with yourself and willing to learn from setbacks.

Five effective growth strategies for

entrepreneurs
1. Hire People You Trust & Delegate Strategically
Your company is like your baby. Trust me, I understand. I left a
senior director position at Capital One in 2008 to start my own
business, and after spending countless hours raising it, with my
hand in every aspect of the company’s operations, letting go –
even a little bit – was very difficult. However, much like a parent
knows that sending their child off to college, while hard, is the
best thing for them, I knew that no matter how hard I worked, I
couldn’t do everything and build the company in the manner I
envisioned.

The thing is, delegating responsibility isn’t necessarily as simple

as hiring someone off the street and giving them a bunch of tasks
to complete. Effective delegation requires an intimate knowledge
of oneself. You must understand your own strengths,
weaknesses, and preferences in order to identify where additional
manpower is needed as well as what type of people to hire.
Ideally, your employees’ personalities should mesh well with your
own (you’re going to spend countless hours working together,
after all) and their strengths should complement your
weaknesses.
Once you get the right personnel in place, all that will be left to do
is train them and avoid micro-management. I personally feel that
intensive, hands-on instruction in the beginning of an employee’s
tenure is effective in that it clearly establishes your expectations
and will help you either reinforce or see the error in your hiring
decision. If you decide to retain the employee, you’ll be confident
they know what they’re doing, which will allow you to focus on
more strategic work. If you decide to let them go, well, at least
you found out they weren’t right for the job early on.

2. Be Careful with Raising Money

“Too many entrepreneurs view raising venture capital as an end
in itself,” Angelo Santinelli, an adjunct professor of
entrepreneurship at Babson College, told CardHub in a recent
interview. “They place too much emphasis on the signaling
benefits of raising capital and think short-term rather than long-
term about issues of control, dilution and strategic direction of the
business.”

This is a lesson that every entrepreneur must learn in order to

survive. Raising capital is not the goal; building a fundamentally
sound company that is successful in the long term is the true
objective. And in order to meet it, you must think long and hard
about your funding needs before accepting money from a
professional investor or leveraging expensive loans and lines of
credit. Rashly jumping at financing opportunities can lead to all
sorts of unintended consequences, after all.

For example, while the deep pockets and connections that

venture capitalists bring to the table can be extremely alluring,
getting into bed with them necessitates ceding significant control
and equity and is a major managerial distraction.
Similarly, statistics have shown that for every $1,000 in credit
card debt a company incurs during its first year, the odds of its
survival fall by more than 2%. Using a business credit card for
funding purposes can also rob you of debt stability, as issuers are
able to raise rates on existing balances whenever they want.
Besides, having just the right amount of capital can actually be a
growth strategy in and of itself, as it forces you to become more
efficient and maximize every dollar – habits that can pay huge
dividends once you become profitable.

“An abundance of capital tends to dull the mind. There is the

tendency to hire too fast, pursue too many un-validated ideas,
and spend on non-strategic elements of the business,” according
to Santinelli. “Using one’s own capital first and essentially being
capital constrained in the early going is not necessarily a bad
thing. There is a natural need to focus more narrowly, develop
and test hypothesis, and harness resources intelligently before
building the product.”

3. Market Penetration & Development

Once you establish a good product and a solid customer base,

expanding into adjacent markets and figuring out how to
maximize profits from existing customers are natural next steps
that come with relatively low risk, yet have the potential to
provide significant growth. The way in which you approach this
type of expansion and when you do it will depend on your
industry as well as the amount of capital required.

The amount of market research and business planning that is

required to expand in this manner is inversely proportional to how
easy it is to test your way into the market. If testing is easy, don’t
waste time trying to perfect every minor detail, as market
response will provide all the feedback you need. However, if you
are in an industry where market maneuvering is difficult and
costly, you’ll need ample cash on hand to withstand unexpected
challenges and market vagaries.

4. Seek Strategic Partnerships & Acquisitions

While young companies typically don’t have the capital needed to

buy out the competition or purchase key cogs in their supply
chain, you can use strategic partnerships with higher-profile
businesses in order to build brand awareness and stature in the
industry. Then, as your company matures and either reaps profits
or goes through another round of financing, you may be able to
make acquisitions in order to bring your business into a new
space or reduce costs in the long term.

5. Don’t Get Comfortable

The best companies don’t get comfortable; they continually look

for ways to improve their product, become more efficient, and
increase customer satisfaction. Just look at the likes of Apple,
Facebook, and even the NFL. All have extremely popular
products, yet they continue to take risks because that is the only
way to avoid becoming obsolete.
This also means that you must not be afraid to sacrifice
profitability now in return for a bigger payoff down the road. Truly
taking the next step with a start-up often requires diving back into
the red in a big way. Just make sure to dive deep enough that
you avoid winding up in no-man’s land

At the end of the day, growing a business is equal parts art and
science. Analytics, market research, and past examples from the
corporate world can give you ideas about the best ways to
expand, but you have to come up with the right recipe for your
particular company and appetite for risk.