4 unexpected challenges entrepreneurs may not be prepared for
Starting a business from scratch sounds exciting, specifically when it is your dream venture. However, the entrepreneurial path is never easy to traverse, no matter how enthusiastic and committed one is. Statistics don’t help either because they show that 10% of startups fail within the first year and 90% do not make it in the long run.
Despite the discouraging numbers, 15% of the US population is engaged in startups. Many entrepreneurs succeed because they take a visionary approach from the ground up. They foresee challenges and have solutions in place even before encountering them. This secret strategy enables them to get through the initial phase and establish a robust foundation.
Financial limitations, inadequate team management, fierce competition, and evolving consumer demands are a few common challenges you may face. However, winners look beyond these and ensure readiness for the unknown.
In this post, we will highlight a few unexpected challenges that may hinder your startup’s growth and suggest solutions for them.
Challenge #1: Selecting a product or service
While this may sound basic, countless entrepreneurs fall short when it comes to choosing a winning offering. There’s a difference between following a dream and making a profitable venture out of it. Selecting a product or service requires answering a few questions:
- Does your offering address a pain point of your target audience?
- Are there any competitors offering a similar product or service?
- Is your offering likely to stay in demand for the long run?
You must have the right skills and passion to launch your startup, but ensure the right start with market research. According to Statista, the global market research industry was worth $ 84 billion in 2023, double the revenue for 2008. This shows how crucial it is to get all the answers before launching your product or service in your target market.
Challenge #2: Sustaining revenue
You may think that getting funds for your startup is the biggest obstacle, but wait until you start your business. Sustaining revenue is even harder in a competitive industry. At the same time, it decides your company’s fate. McKinsey notes that robust and consistent revenue growth is one of the surest signs of a thriving business.
Entrepreneurs need to learn the art of managing money, right from ensuring timely payments to minimizing expenses. Consider the example of a food truck startup. As an entrepreneur, the first question coming to your mind will be how to run a food truck business profitably. Simple as it sounds, sustaining revenue in this niche can be a challenge.
Generating revenues and profits is not just about preparing delicious food and impressing diners with great service. Customers appreciate the ease of payment that comes with a point-of-sale system. It enables them to pay quickly and effortlessly, using a variety of methods. Your revenues will grow when customers love your food and do not stress about paying for it.
Challenge #3: Navigating legal and regulatory requirements
Whether you run a food truck, staffing agency, production house, or marketing company, you will have to follow some regulations and guidelines. Many entrepreneurs are not prepared for the complex legal and regulatory requirements in their niches.
For example, you may need to have licenses and permits to sell a specific product. Taxes and other regulatory guidelines may overwhelm you at the start of your journey. Even worse, failure to comply with these essentials may lead to legal action, penalties, or even the closure of your new business.
Once again, conducting thorough research enables you to understand the legal and regulatory requirements of your industry. Consulting with a lawyer is another option if you want to fortify your startup against the consequences of non-compliance.
Challenge #4: Handling rapid growth
While growth is a positive sign for a startup, it can be challenging if it happens too rapidly. As an entrepreneur, you may struggle to scale up operations to keep pace with the growing demand. This may overwhelm existing processes, strain operations, and result in a quality issue.
Imagine that your food truck suddenly gets a foot traffic of 100 diners when it is capable of handling only 50; there will be chaos everywhere, right? The best solution is to plan for growth from the outset. According to Investopedia, growing a business takes constant focus, creativity, and good organizational skills. Additionally, you need funds and teamwork.
When you foresee impending growth, create scalable processes and ensure you have enough capacity and infrastructure to manage increased demand. Additionally, maintain a focus on your startup’s core values. It will ensure that growth does not compromise the quality of your offering or the culture of the business.
To wrap it up, startup owners may face several hindrances in the initial stage of business. However, being aware of unexpected challenges and prepared to deal with them can give you a smooth start. You will not be taken by surprise because you already have a plan B.