Congratulations! You have made the decision to become an entrepreneur. You are dedicating yourself to starting a new business and are abandoning your steady day job. This is unknown and somewhat frightening territory. Dealing with unpredictability is one of the hardest challenges in being a new entrepreneur. In fact, in order to succeed, there are four challenges a new entrepreneur should confront:
- Dealing with the unknown
- Cash-flow management
- Good at starting, but not so good at running a business?
- Decision making
Dealing with the unknown
The best way for an entrepreneur to confront the challenges of the unknown is to plan ahead, especially by formulating solutions to two fundamental issues. First, you must be fully confident that you have an outstanding product or service that adds value to your customer’s life. Second, you must be determined to maintain your values and business ethics, keep your word, and deliver exactly what you’ve promised. If you fail in this, you’ll fail to attract new customers and will lose the old ones. In such a situation, cash-flow management, team-building, and cutting costs activity will never be enough to relieve you from the chaos reigning in your company. Therefore, go back to the basics of honestly serving others.
Challenge number two is the entrepreneur’s deep-rooted fear that after having done an excellent job and sending an invoice, the question remains, “Will I get paid 30 days later, or even worse, will I get paid at all?” Cash-flow management is essential to an entrepreneur’s survival. He has to pay his employees, contractors, mortgage, etc… So, if cash-flow is not well managed, this is likely to mean the end of his business. What can 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 the 30-day invoice period to 15-day. Third, you can do proper cash-flow planning to understand critical points and risks in your cash-flow. Fourth, as soon as possible, you must put some cash into a reserve fund for unexpected risks like Covid-19 or a recession. Fifth, you can ask your vendors to invoice you 60 or even 90 days to allow time for your payments to arrive.
Good at starting, but not so good at running a business?
Third, an entrepreneur’s challenge is to avoid being 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 start and sell businesses – for a modern entrepreneur, selling is good business. Besides great ideas, young professional entrepreneurs in the 21st century also have a great education. They don’t just do – they understand what they are doing. Keep on playing and enjoying the entrepreneurial game – the 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 take you by surprise, and those first few volatile months will be crucial if you are to stay ahead of the competition. You should, therefore, prepare ahead by receiving training in coping with stress, getting rid of perfectionism, taking deep breathing lessons, learning from poor decisions other have made, doing some role-playing in making decisions, or just “keep deciding” swiftly about the items on your task list.
Lastly, please do not forget to enjoy your new lifestyle, knowing that entrepreneurs do overcome challenges!
And if you need assistance, consider applying to receive an MBA at the Alfred Ford School of Management.