Starting a New Business: Common Challenges and How to Overcome Them

Overview

Starting a new business should be exciting, after all, many people dream of becoming their own bosses and not answering to anyone. As thrilling as it seems, it is also one of the scariest things to do. So much so that a majority of those who consider entrepreneurship either as a side hustle or a career end up not taking the plunge. 

From the onset, there are two challenges that people are bound to face – finding a profitable business idea and funding the business.

Challenge #1: Finding a Profitable Business Idea

It is simply not enough to have a business idea. Anyone can come up with those. But finding a profitable idea can be very challenging. Many businesses that fail within the first three years are products of a nice idea and not a profitable idea.

In order to avoid this pitfall, an entrepreneur needs to ensure their business idea has three components:

1. It addresses a pressing need or want – a solution that will either take away a customer’s pain or give them pleasure. 

2. Customers who are able to pay – customers that have the first component and the means of paying at your offering price.

3. Customers who are willing to pay – customers who have the first two components and are willing to pay for the product or services.

Challenge #2: Funding the Business

Finding funds for a new business can put a tremendous amount of strain on even the most experienced entrepreneurs. Entrepreneurs need funds to start a business and also expand the business. Fund raising is an essential part of entrepreneurship. 

There are three common ways to fund a business.

1. Personal Funds – the easiest way to fund a business is with personal funds such as savings, inheritance, and returns from other investments. Unless you have a fortune, while this might be sufficient to get you started, it might not be enough to keep the business running. That is why it is advisable to consider other sources.

2. Investors – finding investor is also a challenge on its own. However, once found, the right investor would not only support you financially but also help you grow your business through exposure to other resources such as access to their network who could be potential investors, industry professionals, or help you with sales and marketing at no cost.

3. Loan – loans from traditional financial institutions such as banks is another option. Banks fund businesses at different interest rates. However, loan interest is lower if you look outside your bank because start-ups are riskier than existing businesses due to the high probability of failure. Other forms of loans may come from family and friends, online loan services, and government aided schemes.

Summary

Before taking any loans and investors, be sure to shop around for better rates. Asides from lower rates, ensure there are no hidden fees and binding terms to avoid any surprises. Funding your new business could be easier than you think if you search in the right places.