Top challenges faced by entrepreneurs todayChen Wan Lim
Transitioning from a steady paycheque to an irregular source of income can be daunting and most often, is what puts most people off from venturing into the path of entrepreneurship and how to become an entrepreneur. The path of an entrepreneur is definitely not a walk in the park. Putting aside the potentially large reward and the payoff from a successful venture, entrepreneurs face a host of challenges every day; from personal challenges to issues beyond their control. These are the top and most common challenges faced by entrepreneurs today:
Financing the business
Financing a business is the first step after an idea is hatched. It gets increasingly more difficult if the entrepreneur ideas are unconventional and unproven. The tough part about having a new idea is to convince bankers that this new idea will work and that the returns on investments warrant a loan from their institution. There are multiple platforms to raise money. Common routes are bank borrowings, personal cash, crowdsourcing, the sale of equity stake, private equity and so on. The common similarity between all these financings remains the same; to convince the owner of the fund that they can expect a return on their investments.
Cash flow management
After the initial seed money or funding is obtained to kick start the business, the next challenge will be to sustain the operations of the business and to fund further growth opportunities. In every business, there will be some sort of a gestation period in which large sums of money are used to grow the business but the returns or cash collection are minimal, insufficient to fund the day-to-day operations of the company. As such, entrepreneurs have to cleverly manage and time their cash flow as to meet their periodic cash obligations.
Apart from challenges involving money, another key challenge faced by businesses is the recruitment, management and retention of the employees. Entrepreneurs need to constantly motivate their staff, especially those involved in sales and to manage the entire workforce to create a harmonious working environment, all whilst trying to empower the staff to perform their very best.
Competition and threats
There’s bound to be competition in every business. It need not necessarily be a direct competitor but it could also be competition from ever changing business environments where new technologies and processes replace existing ones. The key to handling such competition and threats is for the entrepreneur to firstly identify the threat, or even better, to identify the threat even before it becomes one. This requires foresight, vision and careful strategic planning.
In a nutshell, the path of an entrepreneur is tough. But fortunately, there are specialised programmes such as MBA programmes which prepare candidates for the path of entrepreneurship. MBA programmes are designed to equipped candidates with financial management skills, human capital management skills and business management skills. In addition, candidates are able to learn and be guided by successful entrepreneurs which could be their peers or could be a guest lecturer. The first step to becoming your own boss is to be equipped with the necessary skill set first.