Congratulations! You made the decision to become an entrepreneur. You are going to dedicate yourself to starting a new business and are abandoning your steady day job. This is scary, unknown and somewhat frightening. Dealing with this volatility is one of the hardest parts of being a new entrepreneur. There are four challenges a new entrepreneur should confront to succeed:
- Dealing with the unknown.
- Cash flow management.
- Good to start, bad to run a business?
Dealing with the unknown
Furthermore, the best way for an entrepreneur confront the unknown is to plan ahead the solutions for two fundamental issues. First, you’ve to have an outstanding product or service that adds value to your customer’s life. Second, you’ve to maintain business ethics and your values, keep your word and deliver exactly what you’ve promised. If you fail to do so you’ll fail to attract new customers and will not retain the old ones. In such a case, no cash flow management, no teambuilding, and no cutting costs activity will be enough to save you out of the chaos reigning in your company. Therefore, go back to the basics of honestly serving others.
Challenge number two is the fear rooted deep down in an entrepreneur who has to send an invoice after a job well done has to do with the question “Will I get paid 30 days later or even worse will I get paid at all?” Cash flow management is essential for an entrepreneur to survive. He has to pay his employees, contractors, his mortgage and unless managed well poor cash flow might mean the end of his business. What can be done to prevent this scenario?
First, you can negotiate a down payment to cover all expenses linked with a given project. Second, you can require faster invoice payments and cut 30 days to 15 days invoice period. Third, you will do proper cash flow planning to understand critical points and risks in your cash flow. Fourth, as soon as possible you will put some cash aside in the reserve fund for the unexpected risks like Covid-19 or a recession time. Fifth, you can ask your vendors to invoice you 60 or even 90 days to allow time for your payments to arrive.
Good to start, bad to run a business?
Third, an entrepreneur’s challenge is to be trapped in the idea that you have to run the business you have started. A good entrepreneur does not have to be a great manager. Your company is not a medal for your ego. Modern entrepreneurs sell and start businesses. Selling is not a failure but a good business if you are a modern entrepreneur. The professional young entrepreneur in the 21st century have great education apart from great ideas and they don’t just do, they understand what they are doing. Go on keep playing and enjoying the entrepreneurial game – smart way!
Lastly, the new entrepreneur typically underestimates the challenge of constant decision making. You will make hundreds of decisions a day and fatigue will set in. A new level of stress will surprise you and those first few volatile months will be crucial if you are to stay ahead of the competition. Therefore, you should prepare ahead. Take training in coping with stress, get rid of perfectionism, take a breathing lesson, learn from poor decisions other have made, do some role-playing in making decisions or just ”keep deciding” swiftly about the items on your task list.
This concludes four challenges a new entrepreneur should confront to succeed. By knowing and applying them you have become a “homo entrepreneur” with challenges served for a breakfast. Lastly, please do not forget to enjoy your new lifestyle knowing that entrepreneurs do overcome the challenges!
Finally, if you need assistance take an MBA like the one at Alfred Ford School of Management.