The modern economic market is certainly competitive, and up-and-coming entrepreneurs have many challenges they must overcome if they want to be successful. However, it can be difficult, especially for new entrepreneurs, to know how to solve these common challenges and maximize company profitability.
Let’s look at the most common challenges entrepreneurs may face throughout 2023 and discuss solutions you can incorporate into your enterprise.
Cash Flow Management
Cash flow management is one of the most common challenges that new businesses and entrepreneurs face. Studies show that 61% of small businesses worldwide struggle with managing their cash flow. But if you can’t properly track, organize, and plan your cash flow, you’ll have difficulty knowing how much money you can spend every week, month, or quarter. The problem even becomes more complicated once your business is located on the cloud and using usage-based solutions to sell your product. That's exactly why FinOps is gaining momentum and holistic solutions such as Finout are becoming important.
This is doubly difficult if you receive your income from delayed invoices, a common arrangement in the entrepreneurial world. Waiting for money for work that you have already completed can put a heavy strain on your finances, especially in the early days of your business.
How To Solve It
Solving this problem is mostly a matter of careful budgeting and financial planning. Take a look at your cash flow statement and use accounting software to budget for upcoming expenses based on previous purchases. Don’t forget to include necessary expenditures, such as credit card fees (which can range between 1.5% and 3%) and loan payments, into your budget.
The more data you gather, the better you’ll be able to plan your business operations and decisions around your current and projected cash flow.
With that said, knowing how to do this properly could take additional training. You may want to hire an accountant or CPA or become a CPA if you already have a financial degree. You could also use CPA studying materials from exam prep courses found on cpaexamguy.com to get certified or learn more about financial topics.
Time Management
Many entrepreneurs also have difficulty managing time. Time management challenges can apply personally or to your employees. For example, maybe you wish that there were more than 24 hours a day so you could accomplish more for your business.
Unfortunately, this is impossible. But on the bright side, you can practice better time management with a few smart strategies.
How To Solve It
Take a hard look at your daily schedule and eliminate anything that isn’t absolutely necessary. Alternatively, make a goal list and break those goals down into things you can accomplish each day, week, and month. This will help you prioritize your work and tasks and use your time more efficiently.
It might also be helpful to check in with yourself regularly to analyze whether you are using your time wisely. That way, you can change your activities or behavior if you feel your time could be better spent doing something else.
Raising Capital
Naturally, entrepreneurs face challenges in raising capital to start their businesses. Every company needs an initial influx of cash to get off the ground and start producing products or preparing services. This can be tough, particularly if you are trying to start a business in a crowded market or your idea is so out there that it’s not the best for inspiring investor confidence.
How To Solve It
You can often overcome capital raising challenges by combining multiple funding sources, such as angel investments and personal funds, asking for funds from friends and family members, and seeking out investments from hedge funds or other companies.
Don’t forget to consider loans from banks, credit unions, and other normal financial institutions as well. Solving capital problems usually means getting money from any source possible, not limiting yourself to one or two potential income streams.
Deciding What To Make or Sell
Maybe you have a great general business idea but aren’t sure what to make or sell specifically. This can make it very difficult for you to introduce your business idea to an investor and acquire needed income. It can also make it tough for you to narrow down the details of your entrepreneurial ambition.
How To Solve It
If you’ve already found an area that interests you, conduct competitor research to learn more about the industry. Don’t just look at what other similar companies are selling; analyze a wide range of competitors to identify whether there is something they’re not offering. For example, if you want to sell leisurewear, perhaps there is a style, material, or color palette you’d like to wear yourself that you can’t find in any other shop.
Finding a good business idea is not so much about coming up with something no one has ever thought of but rather figuring out whether an existing product or service could be improved.
Growing Your Business
Growing a business is usually much harder than starting it. Many modern entrepreneurs face this common challenge once they have their initial seed income and then have to scale up their businesses to attract more customers, make more products, and sell more things.
Usually, that takes more money than startups have to spare, but you can grow your business and overcome this challenge with a few strategies.
How To Solve It
You can accelerate your marketing campaign to maximize your profits in the short term and make as much money as possible for an upcoming scaling effort.
Alternatively, you can try to scale gradually rather than all at once. This may be more cost effective and easier on your organizational resources than opening five new stores and trying to hire staff for those stores simultaneously.
Come up with a dedicated business growth plan that features incremental improvements rather than sweeping changes. Then stick to it for the best results.
Marketing Effectively
Good marketing is a hallmark of every successful business, regardless of industry. However, marketing effectively can be incredibly difficult both because modern consumers have low attention spans and because there’s so much competition. You have to develop a proper marketing plan, however, to raise brand awareness and get people to buy your products or services.
How To Solve It
Solving this mostly relies on building and maintaining an emotionally resonant connection with your target audience. Try to reach out to them through social media and authentic advertisements.
Additionally, you should staff a customer support or a social media management team to build connections with individual customers. Over time, this will result in a better brand reputation, which will spread like wildfire across the internet and help your other marketing efforts.
In this day and age, an authentic, real-feeling brand will perform better in the long run than a brand that feels cookie-cutter or overly corporate.
Self-Doubt
This personal challenge is one that many entrepreneurs face every day: self-doubt. Self-doubt can be crippling, stopping you from reaching your potential or preventing you from making important executive decisions.
How To Solve It
The best way to solve self-doubt is to seek the honest advice and support of people close to you, like friends, fellow business partners, and family members. Furthermore, try not to be too critical of your efforts; look at the business you’ve built so far and find reasons to be proud of yourself. If you’ve succeeded so far, there’s no reason you wouldn’t succeed in the future!
Wrap Up
Ultimately, these challenges are just some of the hurdles you’ll have to overcome for your business to succeed. But keep the above solutions in mind, and you’ll discover that you hold power to steer your business to success from the get-go.
This post was contributed by a guest author. Mainvest does not guarantee the accuracy of information in this post and does not provide legal, tax, or accounting advice.