6 Challenges Entrepreneurs Face When Starting New Business
4 January 2023
“Overwhelmingly talent (including acquisition, retention, and re‑skilling/upskilling to meet a more digitized future) was this year’s biggest challenge, with 69% nominating this issue ahead of the second‑placed concern, cyber vulnerability (52%). – A Study by KPMG, Australia
Entrepreneurship means turning your passion or idea into something bigger. It’s rewarding being your boss and building a masterpiece from scratch, but it’s never smooth sailing.
While the Australian economy fares well, and business conditions are favourable and competitive, starting a business is a big commitment. There is much to consider: permits, leases, hiring, tax structuring, bookkeeping, marketing, manufacturing, etc.
There are various entrepreneurial challenges, so review them before starting a business, and avoid the common rookie mistakes.
Six hardest challenges entrepreneurs face
Here are six of the hardest challenges entrepreneurs face when starting their businesses so you can scale yourself and avoid them.
“In 2022, new technologies such as AI, machine learning, blockchain, distributed ledger technology and quantum computing are way down the list (15%), but rise to joint third (42%) by 2026.”
Social media is one of the channels that resulted in the increment of the massive number of entrepreneurs in Australia. However, social media keeps on updating itself. Still, various features remain untapped.
Also, it acts as a medium of interaction with the customers. Social media also gives the business a face, making it a wise entity with which customers can connect.
Therefore to gain success in a business, every young entrepreneur must focus on brushing up on their social media skills to maintain the digital image of their business. So, learning about social media apps or undertaking a course to help upskill the knowledge is 100% recommended.
Overnight success is a myth because no such thing exists in this world. Overnight success is the culmination of steady and consistent small efforts over time. Due to its continued growth, many entrepreneurs quit before the major payoff hits.
However, if they hold on for a day, week, or month, everything may come together or even be far from what they have dreamed. Therefore, be determined to hang in there because it’s all worth it.
Managing the cash flow is essential for every new business, and most entrepreneurs need help managing the cash flow of their businesses. The exact problem stems from the delayed generation of invoices, which is common in an entrepreneurial world.
Paying employees late due to poor cash flow planning could negatively affect the morale of staff and their trust in your company. Therefore, it becomes your duty to keep receivables and payables in check, so you do not have to worry about the cash flow of your business.
Hiring talented staff can be daunting, making it difficult for a new company to attract hardworking, dedicated, and loyal employees. At the starting stage of every business, entrepreneurs cannot provide their employees better conditions than well-to-do companies.
Also, hiring talented employees is a time-consuming process. So, develop a specific description for the hiring role and break down the required skills for the job position.
Time management is one of the vital tasks that every entrepreneur must practice. However, it is one of the biggest challenges faced by every entrepreneur. This is because they always wish to have more time to accomplish more tasks. Therefore, you must align your task by creating a goal list and adding daily tasks. Also, make sure to complete the tasks on time.
Every entrepreneur requires a line of credit or a small business loan for capital. In such a situation, cost-cutting looks like a lucrative option. For a new entrepreneur, obtaining credit requires a good background. However, it can be challenging to raise funds if you are a recent graduate.
In such a situation, you can think about shareholding in your business. With more owners, it will be easy to pool up finances for the company.
These are the six common challenges new entrepreneurs face, but sometimes the question might arise: How to be an entrepreneur? We have done the groundwork for you, so let us give the answer that will help you.
How To Be An Entrepreneur in Australia?
- It would be best if you had your original idea to be an entrepreneur. It is the first step in your long journey, so you need to put all of your focus and attention into generating that particular idea.
- Once you generate the idea, you must get into the right mindset. It would help if you approached your idea with a new perspective. For this, you can undertake a course on entrepreneurship or brush up on your business skills.
- Last but the most important point: make a business plan. Now, as your idea is hatched and you have the right mindset, it’s time to set the actual business plan. At this stage, you will know your business model, the resources required, and the necessary finance to carry out business.
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Frequently Asked Questions
1. What are the challenges of starting a new business?
There can be many challenges and hurdles when you start your new business. But some of the major problems you might face are:
- Failure to plan
- Ineffective marketing
- Knowledge and skills gaps
- Financial management
- Securing funding
- Hiring the Right People
2. What are the five entrepreneurial qualities?
An Entrepreneur must possess several qualities to achieve success in his business, and the most common attributes are:
- Critical thinking
- Clarity of vision
- Utilizing own strengths
- Strong communication skills
3. What are the key factors that affect entrepreneurship?
Several factors can affect your entrepreneurship, and some of them are:
- Availability of Capital
- Labor Markets
- Raw Materials
- Political Factor
- Legal Factor