Entrepreneurs face many challenges in today’s ultra-competitive business world; fortunately, contemporary times have also blessed entrepreneurs with more resources for tackling those problems than ever before. The following lists the “Top 10” challenges faced by entrepreneurs today, defines why each problem exists, and offers solutions so you can operate an efficient and successful business:
1. Cash flow management
The challenge: Cash flow is essential to small business survival, yet many entrepreneurs struggle to pay the bills (let alone themselves) while they’re waiting for checks to arrive. Part of the problem stems from delayed invoicing, which is common in the entrepreneurial world. You perform a job, send an invoice, then get paid (hopefully) 30 days later. In the meantime, you have to pay everything from your employees or contractors to your mortgage to your grocery bill. Waiting to get paid can make it difficult to get by – and when a customer doesn’t pay, you can risk everything.
The solution: Proper budgeting and planning are critical to maintaining cash flow, but even these won’t always save you from stressing over bills. One way to improve cash flow is to require a down payment for your products and services. Your down payment should cover all expenses associated with a given project or sale as well as some profit for you. By requiring a down payment, you can at least rest assured you won’t be left paying others’ bills; by padding the down payment with some profit, you can rest assured you can pay your own.
Another strategy for improving cash flow is to require faster invoice payments. I invoice most of my clients at 15 days, for example, which is half the typical invoice period. This means if a customer is late on payment I have two weeks to address it and get paid before the next month’s bills are due. In addition, more and more companies are requiring immediate payment upon project completion – and in our digital age when customers can pay invoices right from their mobile phones, it’s not a stretch to request immediate payment.
You can also address cash flow management from the other side of the equation by asking your own vendors to invoice you at 45, 60, or even 90 days to allow ample times for your payments to arrive and checks to clear. If you can establish a good relationship with vendors and are a good customer, they’ll be willing to work with you once you explain your strategy.
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2. Hiring employees
The challenge: Do you know who dreads job interviews the most? It’s not prospective candidates – it’s entrepreneurs. The hiring process can take several days of your time: reviewing resumes, sitting through interviews, sifting through so many unqualified candidates to find the diamonds in the rough. Then, you only hope you can offer an attractive package to get the best people on board and retain them long-term.
The solution: Be exclusive. Far too many help wanted ads are incredibly vague in terms of what qualifications candidates must have, what the job duties are, what days and hours will be worked, and what wages and benefits will be paid. You can save yourself a ton of time by pre-qualifying candidates through exclusive help wanted ads that are ultra-specific in what it takes to be hired at your firm, as well as what the day-to-day work entails. Approach your employee hunt the same way you would approach a customer-centric marketing campaign: through excellent targeting.
Once you have a pool of prospects, arrange for a “walking interview” in which you take candidates on a tour of their working environments. Ask questions relevant to the job and to candidates’ experiences, expectations, dedication, and long-term goals. Don’t act like an overlord determining which minion gets to live another day; rather, behave as though you’re seeking a partner to help you operate and grow your business.
Take the time to seek real references: not the neighbor lady your candidates grew up with, but people who can honestly attest to their work ethic and potential. Once you’ve picked a candidate and before you’ve made a job offer, ask them specifically what it will take to keep them employed with you long-term. Tell them to be honest with their expectations. Provided they do a good job for you, you’ll know what kind of rewards they’re seeking and you can make adjustments accordingly: do they want more vacation? The opportunity for advancement? More pay? Freedom from micromanagement?
This isn’t to say you have to bend backwards for your employees; however, it stands to reason that if you make expectations clear for both parties you can lay the foundation for a long-term, mutually-rewarding client-boss relationship.
3. Time management
The challenge: Time management might be the biggest problem faced by entrepreneurs, who wear many (and all) hats. If you only had more time, you could accomplish so much more!
The solution: Make time. Like money, it doesn’t grow on trees, of course, so you have to be smart about how you’re spending it. Here’s how:
- Create goal lists: You should have a list of lifetime goals, broken down into annual goals, broken down into monthly goals, then broken down into weekly goals. Your weekly goals, then will be broken down into specific tasks by day. In this manner, what is on your task list in any given day is all you need to do to stay on track with your lifetime goals
- If any tasks do not mesh with your goals, eliminate it or delegate them
- If any tasks do not absolutely have to be completed by you, delegate them
- Consistently ask yourself: “Is what I’m doing right now the absolute best use of my time?”
4. Delegating tasks
The challenge: You know you need to delegate or outsource tasks, but it seems every time you do something gets messed up and you have to redo it anyway.
The solution: Find good employees (see above) and good outsourced contract help, for starters. You might have to pay a little more for it, but the savings in time (and the resulting earning potential) more than make up for it.
Next, be ultra-specific as to what you want done. It will take a little more time at first, but write down detailed steps listing exactly what you want your help to do. Don’t make assumptions, and don’t assume your help will be able to think for themselves (they can, but they will complete the job verbatim because that’s what they’re trained to do). So, don’t say “list stats in a spreadsheet” when you can say “alphabetically list XYZ in the right spreadsheet column, then list statistic A in the next column.” It might seem like overkill, but take the time to be specific once and your help will get it right every time thereafter.
5. Choosing what to sell
The challenge: You know you could make a mint if you just knew what products and services to sell. You’re just unsure how to pick a niche.
The solution: Admit that you’re weak in identifying prosperous niches, and delegate the task to someone who is strong in this area. You don’t have to hire a huge, expensive marketing firm; rather, recruit a freelance researcher who has experience in whatever type of field you’re considering entering (retail ecommerce, service industry, publishing, etc.). Have them conduct market research and create a report with suggested niches, backed by potential profit margins and a complete SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats.
This isn’t to say you should have someone else decide for you; however, if you’re not good at identifying niches it’s a good idea to have someone who is make suggestions. You can then analyze the suggestions for yourself to determine if you agree. Taking this step now can save you a lot of time, money, and hassles later – and it can save your entire business and livelihood.
6. Marketing strategy
The challenge: You don’t know the best way to market your products and services: print, online, mobile, advertising, etc. You want to maximize your return on investment with efficient, targeted marketing that gets results.
The solution: Again, if you’re not adept at creating marketing plans and placing ads, it’s a good idea to outsource your marketing strategy to someone who is. At this point, all you need is a core marketing plan: what marketing activities will you undertake to motivate purchases? Give your planner a budget and tell them to craft a plan that efficiently uses that budget to produce profits.
This is not the time for experimentation. You can do that later, on your own or with the advice of your marketing strategist, after you’ve established a baseline that works.
The challenge: You want to start or grow your business, but you have little capital to do it with.
The solution: There are many ways to earn funding, from traditional bank loans to family and friends to Kickstarter campaigns. You can choose these routes, certainly, but I prefer the self-fueled growth model in which you fund your own business endeavors.
Instead of trying to launch a multi-million dollar corporation overnight, focus on your initial core customers. Continually work to find new customers, of course, but consistently strive to be remarkable to those customers you already serve. Word-of-mouth will spread, and more customers will come looking for you. As they do, develop systems and business processes that allow you to delegate tasks without sacrificing quality. Your business will grow slow and steady, and you’ll be able to solve problems while they’re small.
Think about where you want to be five years from now. Can you get there without help, even if you have to delay growth a bit while you’re doing it? This is the best strategy to adopt for small business entrepreneurs. If you do feel you need funding, however, be sure to consult an attorney to make sure you’re not giving up too much of your business to get it.
8. Strapped budget
The challenge: Even though cash flow is fine, it seems you never have enough in your budget to market your company to its full potential.
The solution: Unless you’re one of the Fortune 500 (and even if you are), every entrepreneur struggles with their budget. The key is to prioritize your marketing efforts with efficiency in mind – spend your money where it works – and reserve the rest for operating expenses and experimenting with other marketing methods.
Keep a close eye on your money, too: chances are, there are areas you can skim to free up more funds. Unless an expense is absolutely critical to your business and/or represents an investment with an expected return, cut it. In fact, do this exercise: see how lean you can run your business. You don’t have to actually do it, but cut everything you can and see if you still feel you can run your business (save for what you have to delegate and market with). Somewhere in between your leanest figure and your current budget is a sweet spot that will allow you to be just as effective and leave funds leftover to fuel growth.
9. Business growth
The challenge: We’re assuming you are growing, not that you can’t grow, and you’ve come to the point at which you can’t take on any more work in your current structure.
The solution: Create new processes that focus on task delegation. Many entrepreneurs, used to wearing all the hats, find themselves in this position once they’ve achieved a modicum of success. Because you’re doing everything, your growth halters to as top when it hits a self-imposed ceiling. The only way to break through is to delegate tasks to others and take yourself out of the production end and segue into management and, finally, pure ownership.
The challenge: An entrepreneur’s life is not enviable, at least in the beginning. It’s extremely easy to get discouraged when something goes wrong or when you’re not growing as fast as you’d like. Self-doubt creeps in, and you feel like giving up.
The solution: Being able to overcome self-doubt is a necessary trait for entrepreneurs. Having a good support system will help: family and friends who know your goals and support your plight, as well as an advisory board of other entrepreneurs who can objectively opine as to the direction of your business.
One of the best ways to deal with self-doubt is to work your goals and tasks lists. When you’re down and lack motivation, look at your lists and know that the tasks you do today are contributing to your lifetime goals. By doing them, you’re one step closer, and you can rest assured that you are, indeed, on the path to business success.
Entrepreneurs face many challenges, and volumes have been written about how to overcome them. Perseverance and intelligence are your allies; use them to your advantage keep working toward your goals. Understand that you’re not the first to struggle, and because of that there are many resources available to help you get through your darkest days as an entrepreneur so you can reap the immeasurable rewards that come with building your own successful business.