Common Obstacles in Starting a Business and how to Overcome Them
This is a guest post by Emma Worden
Choosing to start a business is a big step for any entrepreneur. Running your own business means you have good chances of having a lucrative career and an opportunity to become your own boss. However, starting a business requires a lot of effort and dedication. Not only that, but starting and running a business can oftentimes be very difficult and extremely daunting.
There are many challenges and obstacles on the road to success and it's up to you to find the best possible way to overcome those obstacles. It's no secret that many entrepreneurs fail in their attempt to run a business, but that shouldn't discourage you from trying nonetheless. If you do things the right way and if you make time to plan things out, you can run a business that will eventually reach success. Therefore, here are a few common obstacles in starting a business and how to overcome them.
Structuring your business
One of the most important factors in running a business is ensuring it can operate legally. Many entrepreneurs don't know how to properly legitimize their business or they neglect this step believing it's not that important. However, one thing that can hinder your business the most is government fines and penalties for not following proper regulations and rules. You can end up in both legal and financial trouble. What you need are proper licenses, insurances, permits and tax regulations to ensure your business can operate normally.
To ensure that, you must choose a proper business structure for your business. A business structure determines the amount of liability for the owner and the amount of paperwork for the business, as well as the exact taxation you must pay. For instance, you can choose to be a sole trader, but you must know that all the liability will be on you. Instead, choosing an LLC (Limited Liability Company) may be a better suited structure for your business.
Cash flow issues
One of the biggest obstacles most businesses face is issues with their cash flow. Financial trouble can easily pile up if your cash flow isn't positive enough to sustain your business. Having a bad cash flow means there's more money flowing out of your business than its flowing in. In other words, you have more expenses than incomes and you lack the cash to make immediate payments.
This obstacle may be one of the toughest obstacles to overcome. What you can do is apply for start up business loans for additional funding. If your credit score is bad, you may consider opting for bad credit business loans that look more favourably on businesses with a bad credit score and history.
Lack of funding
Cash flow issues come when your business starts making sales and profits, but many businesses don't manage to get even that far. As a matter of fact, 8 out of 10 entrepreneurs fail, due to the lack of funding, to further grow their business. The main reason is that they underestimate the costs of running a business and they dry out their budget before they see any return on investment.
To avoid this, you must plan out your budget accordingly and prepare for any unexpected cost you may run into. In addition, you can seek help from investors to overcome this obstacle. There are various options at your disposal and it's up to you to choose the best course of action for your business. For instance, you can seek aid from angel investors or venture capitalists. Not only that, but you can also try a crowdfunding option and gain financial aid from your target audience.
No market demand
One of the major obstacles you might run into is the lack of market demand for your products or services. It may seem like the market is oversaturated and highly competitive, however you may believe that your USP makes your products or services different from anyone else.
One way of overcoming this challenge is focussing on a specific niche market. A niche is a consumer base with specific needs. If those needs aren't met, niche consumers will settle for the next best thing. However, if you manage to meet the needs of such a consumer group, you'll have trusted and loyal customers who will help drive your business forward.
Another thing to note here is that if you get your branding and proposition correct, and market to the right people, your customers will want to buy from you because you’re the one who is selling!
Your value isn’t found in what you’re selling. It’s found in the fact that you’re the one selling it.
Obstacles and challenges are quite common in the business world. Some can be easily dealt with, while others may prove to be more difficult to overcome. However, nothing is impossible if you make an effort to find a way. That's why it's important to strategise and plan ahead, so that you can ensure your business success.
This post was written by Emma Worden. Emma is a startup funding consultant from Sydney. She enjoys reading and writing on different aspects of entrepreneurship, usually finance and marketing. If you want to read more of her work, you can find it at https://bizzmarkblog.com/