In the business world, it is called M&A (Mergers and Acquisitions). 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. When the Dot com era began, business owners were left with only two options. It's important to watch changes and trends to potentially identify and plan for an economic downturn. Challenges and risks of starting a business Developing the business idea and the vision – this is normally the first challenge faced by an entrepreneur and it... Raising capital for your start-up – potential small businesses … Here are the five biggest challenges for small businesses. … In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.” – Rich Dad. That single vision made Bill Gates the richest man in the world and Steve Jobs the most famous business person of the 21st century. Understand the risks associated with your business and plan for them.Insurance helps. As an entrepreneur, you are bound to have strengths and weaknesses. “In the world of business and investing, your exit is more important than your entry. So you must be careful when hiring employees. The solution: Though various ways are there for arranging small business funding , starting … When I heard this; I was humbled and I strived to make sure I didn’t disappoint. So whatever you have to do today; do it. Growth should never be the enemy of quality. Starting a Business. Change in trends is a challenge you must be prepared for when starting a small business. Finding good employees is a minor task compared to the business challenge of forging your hired employees into a team. What are the major challenges entrepreneurs face when starting a small business from scratch? I was really surprised that someone I don’t know from Adam would help me with such a sensitive problem with no strings attached. Rewarding challenges, but harsh challenges nonetheless. In places where people see a lot of obstacles, I see a lot of opportunities. The period April to July 2011 was one of the toughest in my life. How Investors can Perform Due Diligence on a Company, The Small Business Health Care Tax Credit, go into business without considering the challenges ahead. No introduction, no cross questioning. For many small businesses, having a client willing to pay on time for a product or service is a godsend. If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. “A good businessman must have nose for business the same way a journalist has nose for news. Before starting a business, it is advisable to plan an exit. And if you have an online business startup, the competition gets tougher. No matter how bad the situation is, never lose focus. Financial Risks. Always make sure you preserve your integrity; it can be a life saver in hard times. Entrepreneurs must plan … At a personal level, you may be risking your home, other important family assets, your family wellbeing and your present career. This man don’t even bother to know the name or identity of who he was helping. Many businesses suffer from founder dependence, and it is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows. 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. A small business should not allow itself to become dependent on a single client. If they can’t grasp your vision, if they can’t see the future with you, then they are not worthy being your team. 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. “If you want to know the value of money, go and try to borrow some.” – Benjamin Franklin. Must an entrepreneur face these business challenges when starting a business? Despite all the glitz and glamour attached to the word “Entrepreneurship”, it is somewhat synonymous with risks. 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. Now how did i survive this trying period? But at the same time, it is also fraught with high-stakes risks. 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. A wolf will never hunt alone; it hunts in packs because it knows the power of team work.” – Ajaero Tony Martins. Well, like I said earlier; all problems will surely come to pass. You will have to figure it out yourself or better still, you can consider bringing them on board as partners. As an entrepreneur, you are the only one that knows business your idea to the core. An entrepreneur must always be ahead of his time or else he will lose his relevance. How Much Does It Cost to Open a Home 2 Suites By Hilton Franchise? The main business challenge is going to be your ability to forge that opportunity into a business idea. A guide to help you understand what blockchain is and how it can be used by industries. The Risk of High Costs The amount of money it takes to start a food service business can be daunting: leasehold improvements, food, payroll, waste, insurance, and the list goes on. Political risks An obvious risk for international business is political uncertainty and instability. 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. The challenge: You want to grow or start your new business endeavor, but you’re facing difficulties for financing for new business owners. However, there are some that are strictly small business problems, ones most large companies grew out of long ago. As an entrepreneur, you must possess the ability to see what others cannot see. Below is a list of some common challenges many new business … After developing your idea, the next challenge you are going to face … This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. Instead focus on what works and is … At times, there is something instinctive in me that tell me a business opportunity exist even at a place where others see nothing. Cash flow is the life blood of business and when it begins to trend in the negative, it will only be a matter of time before your business collapses. The third business challenge you will face in the course of starting a small business from scratch is assembling the right business management team. A good businessman sees where others don’t see. That is what makes me different, maybe unique. “Business and investing are team sports.” – Rich Dad. There is a large middle ground between shoddy work and an unhealthy obsession with quality; it is up to the business owner to navigate the company’s processes toward a compromise that allows growth without hurting the brand. 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. It is your self doubt and your laziness that defines and limit who you are.” – Rich Dad, 1. Developing a vision is definitely a business challenge because an entrepreneur must sometimes assume the role of a sorcerer. After developing your idea, the next challenge you are going to face when starting a business from scratch is that of raising capital. To overcome the challenge of raising capital, you must develop the ability to sell your idea and vision to potential investors. Good customers are really hard to find. When I say “sell your ideas“, I mean improving your communication skill and your manner of presentation. 9. 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. Having professional help with money management frees up a small business owner to focus on operating concerns. I want you to venture into the business world and start your own business with a feeling of confidence. That single vision made Henry Ford one of the richest men in history. One of the biggest is liability risks. Developing the Vision and Business Idea. Long and Erratic Hours. Market research isn't something you do as a one-off when you launch your business. Regardless of your financial or social status; you will never be free from problems. Business conditions change continually, so your market research should be continuous as well. The bible said that “a good name is better than precious ornament” and that’s definitely true. You must be on guard for bad customers. But I laughed him off and quietly explained to him that I wasn’t worrying, I was thinking. I turned and it was a man. The ease of starting a business creates a much broader level of competition. Countries and emerging markets that may offer considerable opportunities for expanding global businesses may … The real bone of contention is whether you will survive or not. If you get hit by a car, is your business still producing income the next day? I see this as a business challenge because the process of transforming problems into business opportunities is like trying to turn lead into gold. And the total was greater than the sum of the parts. Keeping Up With Industrial Changes and Trends, “In three years, every product my company makes will be obsolete. These business challenges, if not handled properly can ruin your plan to build a successful business. V. When all human effort fails; turn to God, Yes, God works and he answers prayers. Understanding the challenges and risks of starting a new business 1. A team is a necessity for building a successful business. Let me give you some practical illustrations: “If you want to be rich, you need to develop your vision. And people are barely starting out more often than not talk about common entrepreneurship risks.. Below is an illustration of how the process goes. To every profit, there is a corresponding risk to be taken. A typical example is the Dot com trend, where many established industrial based businesses were wiped out by new web based dot com companies. Entrepreneurs face multiple risks such as bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. A major challenge for all companies is identifying, assessing, and … I have seen entrepreneurs raise millions and even billions of dollars easily; just because they have a reputation of delivering on their words. Challenges and problems will never stop coming no matter how successful you are. Stick with what you believe in.” – Trip Hawkins. But ultimately, it’s up to you to decide the exit strategy you want to apply; but always remember “your exit is more important than your entry.”. Knowing your exit strategy is an important investment fundamental.” – Rich Dad. As I bow my head lost in thought, I noticed someone by my side. If costs are … Whether a service or a product, at some point a business must sacrifice in order to scale up. A good customer will try to do the right thing that will benefit both himself and your company mutually. When I went to borrow money for my business from family and friends; none requested a collateral or interest, none blinked an eyelid before granting my request. 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. Starting a business has never been more exciting. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. A business team is a vital, yet often ignored key to raising venture capital successfully. “Always start at the end before you begin. 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. Sometimes, challenges or problems come so fast that you lose your grip. Buildings get damaged. Entrepreneurs have a tendency to find new ways of getting into trouble very quickly. Risks and challenges of doing business internationally 1 – Unknown trading partners. Developing the Vision and Business Idea, “To have a great idea, have a lot of them.” – Thomas Edison. 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. 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. “You must fire bad customers just as you would fire a bad employee. Is finding a good location a business challenge? A question on your mind right now might be “how am I going to pay this team” My answer is I don’t know. They thought I was going to axe someone but I didn’t. Rather, toughen up. 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 new business requires proper planning, for one thing. “Without the element of uncertainty, the bringing off of even, the greatest business triumph would be dull, routine and eminently unsatisfying.” – J. Paul Getty. The only question is whether we will make them obsolete or somebody else will.” – Bill Gates. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible. … 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. Remember the story of the customer that sued McDonald’s claiming the coffee was too hot. Raising Capital for your Startup. The long and arduous nature of setting up a … Most brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as an individual. Don’t focus on the risks and challanges because the possibilities are infinite. “There is far more opportunity than there is ability.” – Thomas Edison. Trying to make them understand that you are trustworthy and equal to the task is not child’s play especially when you are building your first business. Most smart entrepreneurs will use a certain benchmark as a target and once this specific target is reached, they exit the business. All of that risk is transferred from the larger company to you and your employees. III. “There are a lot of key risks that business owners don’t realize they’re not covered for,” explains Andrew Cohn, president of ALC Risk Solutions Inc., an insurance agency in Boca Raton, Fla. They are a reflection of your business culture and ethics. You must know how to pitch angel investors and venture capitalists alike. a) In the late 70s and early 80s, while IBM saw increase in demand for their mainframe computers, Steve Jobs envisioned a personal computer in every home and Bill Gates envisioned the need for easy to use software for personal computers. Let me explain in detail. He asked me to see him in his office the next day and he gave me the office address. You must be standing on the edge of time gazing into the future.” – Rich Dad. But blockchain is easier to understand than it sounds. It’s never easy to start a business. If an employee of yours is bad or rude to your customers, it is going to portray a bad image for your company. My business was on the brink of collapsing and here was this smart looking guy telling me I can’t access my money. 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. Never make empty promises and when you eventually make a promise; keep to your words. 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. I have said it in previous articles that critical thinking is a key to effective problem solving. This single incident made me wonder the amount of pressure top business leaders and CEOs go through during challenging periods. Lack of an exit plan is the primary reason why most businesses crumble after the death of the founder. “Go to the wolf, consider its ways and be wise. Also, operate with a lean budget with low ove… The sixth challenge you will face in the process of starting a small business from scratch is finding good customers. The Bottom Line Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. I remember going to the bank to meet with my banker. As you read, I hope you learn and profit from my experience. They were four guys that kept each other’s negative tendencies in check; they balanced each other. But they made it clear to me that they were lending me their money based on my reputation of always keeping to my words. What’s more, every day will bring its own fresh challenges, especially when you’re new to the business world. In the month of April 2011, I was robbed at gun point and it took me some weeks to overcome the trauma. That is the more reason you need a business team to cover up or compliment your weaknesses. 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. As I discussed with my banker, I was lost in thought. “Thank God for my customers. These risks and others are vital for any entrepreneur to consider when “biting” into any new business venture. The economy is constantly changing as the markets fluctuate. This piece is about a recent business challenge I encountered, how I solved it and the lessons I learned from the experience. Instead of praying never to encounter challenges; the question I constantly ask myself is “how prepared am I to handle the next challenged? 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. If you want to start and grow into a successful catering company, then there are certain challenges you should expect; i mean challenges … Competition is the next challenge you will face when starting a business. 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. How Much Does It Cost to Open a Super 8 Franchise? Developing a business idea is usually the first challenge faced by every... 2. I know a lot of profitable businesses that have been wiped out by slight industrial changes and trends. Just as you fire employees, you must also be prepared to fire bad customers without hesitation. What I see, you may not see. 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 … On the other hand a competitive drive is often one of the reasons people start their own business, and every challenge represents another opportunity to compete. Companies that give extra flexibility to their employees will have the edge in this area.” – Bill Gates. My dad probably never understood the difference. When I got to the man’s office the next day, he simply signed a document; handed it over to me and said goodbye. I believe with these few examples, my point is clear. This may mean not being able to personally manage every client relationship or not inspecting every widget. They define the process of finding an employee as simply presenting the job description and the right employee will surface. When challenges hit you; don’t break. This is why many small businesses start out with the founders working a job and building a business simultaneously. When your business reaches a certain stage of maturity, you can exit by turning it over to professional managers. In the game of raising capital, you must have a good story to tell; backed by a strong business plan and good persuasion skills. An exit strategy is very important to the long term survival of a business. Once your eyes, ears, nose, heart and brain are trained on business, you sniff business opportunities everywhere. Many business owners—even successful ones—get stuck working much longer hours than their employees. “A business has to be involving, it has to be fun and it has to exercise your creative instincts.” – Richard Branson. You will find out below. Otherwise you run the risk of making business decisions based on out-of-date information, which can lead to business failure. Problem Solving and Risk Management. There is more to raising capital than just simply asking for money. In theory, meeting this challenge is easy—a business owner merely has to give over more control to employees or partners. Great things in business are not done by one person; they are done by a team of people.” – Steve Jobs. 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. “The competition to hire the best will increase in the years ahead. How Much Does It Cost to Open a Pizza Ranch Franchise. Therefore, many small business owners find themselves tied to these habits to the detriment of the company’s development. Developing a business idea is usually the first challenge faced by every entrepreneur when starting a business from scratch. In this case, the business still belongs to you but you are not involved with its day to day affairs. When you exit in this manner, you will have more free time to look at other projects or retire. At this point, I want to make it clear that there’s a big difference between thinking and worrying. Even though I have solved this particular problem, I know bigger problems are still lying ahead of me. A small business needs both. Without competition, there will be no innovation and without innovation, the world will be stagnant. Unfortunately, it is usually that level of personal engagement and attention to detail that makes a business successful. Remember I said that most brilliant ideas never scale through the phase of raising venture capital. But seeing opportunities is just the beginning. Most writers and managers crank up the process of finding good employees as an easy task. Some positive changes are good for the economy, which lead to booming purchase environments, while negative events can reduce sales. There are many standard challenges every business faces, … People resign. As a final note, I want to say that I am happy to be writing this now. Machinery breaks down. 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. To every advantage, there is a corresponding disadvantage. “How fast a company can respond in an emergency is a measure of its corporate reflexes.” – Bill Gates. Those words hit me like thunderbolt. 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. 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. I did not run into a hole and hide; rather, I placed myself in front of my team. The first risk that comes with expanding outside of Australia is having to deal with... 2 – Cultural barriers. But it took me and my team, 90 days of untold stress to bring things back to order. You will have to give up administrative role to assume the role of a watchdog. They buy my products before they are perfected.” – Henry Ford. It’s important to find the right balance between working long hours and business success. While others see problems, you must see opportunities. Seasoned entrepreneurs know that trend is a friend and are always willing to swiftly adjust their business to the current trend. “If you own a butcher shop, don’t hire vegetarians.