5 Challenges That New Businesses Face

by Alex Feldman

April 6, 2018

Businesses face many struggles every day, and if you are a new company, there are many hurdles to overcome. Some may be easier to gauge than others, but some might take failures to see the best way to tackle them. Of course, getting through tough times is the aspiration of any new or growing business so realizing what barriers you may face in the development of your business will help you face any challenges head-on. Some issues are unique to small businesses and often established companies will have grown out of this stage long ago. So what is it that makes them so difficult when you are starting out?

 

Take a look at some of the major challenges that are faced by new and emerging business in every sector.

 

Managing money

 

Managing money is the lifeblood of any business so if you don’t have a handle on it from the outset, times can get tough very quickly. Capital in the initial foundation for a fledgling company so ensuring you have enough to cover the first months of trading as well as the start-up costs will help to keep the business afloat while you focus on bringing the money in. Managing money isn’t just important in the first stages of business inception, as when the cash starts rolling in, you’ll want to be sure that you can cope with the incomings and outgoings while you start growing. Sometimes you may need the help of a professional to complete your bookkeeping or accounts to ensure everything is running smoothly and there is an impartial view of the money in your company. It might also be necessary to fund aspects of the company if the extra cash is needed and services such as Bonsai Finance can help provide resources for company fluidity.

 

Putting all your eggs in one basket

 

When businesses first start out, you may have a small customer base for your products and services. This may be fine in the short term but limiting yourself to a handful of clients can lead to challenges later on if they decide to go elsewhere. If a single client makes up over half of your income, then it is time to start thinking about diversifying your customer base. Having just a few clients could lead to issues with cash flow, and if any of them decide not to pay you on time, this could affect other areas of the business such as payroll and purchasing. Having a larger customer base will help you to spread out the income over extended periods of time and also reduces the issues when it comes to bill payments. In the early stages of business, it may prove hard to diversify, as you may not have the time to market your services to a wider audience. Investing in marketing and new ways to sell yourself will help to bring new customers in and give you a better stream of cash to prevent hold up in other areas of your business.

 

Prevent burn out

 

A new company takes time and energy to get it off the ground, and this can often sap the life out of you especially if you are a small team. The constant pressure and long hours can start to get to you and even for the most passionate people; this can create barriers to sustainable development. Taking time off is also often seen as something that can’t be done in the early stages of business, as this might mean it will fail without your being there constantly. In fact, the truth is that taking some much-deserved time out might be exactly what you need to get a clearer head and reduce burn out early on. If you let things get on top of you and don’t take the necessary time to get your ideas together, this could be a failure that will be hard to come back from. Fatigue can also lead to bad decision making as you are in an irritable and irrational mental state. These decisions can have a detrimental effect on the future of the business and may lead to wasted cash and poorly implemented plans in the long term.

 

Getting the balance right

 

If your company is raking in the orders and cash if flying in the doors, this is great news, but there is also something to be cautious of. Although you may be able to handle this current activity level now and are enjoying the profits, you have to ask yourself whether you would be able to handle any further orders without quality being compromised. As a new business grow, the processes can become overwhelming and sometimes this can lead to rushed work and productivity that is flawed. Getting the balance of quality and quantity is paramount to the sustainable success of a company as swaying too much to one side can have effects on reputation and customer uptake. Striving to compromise on certain elements of the company will help you take on as much work as you can handle to the best standard you can create. If the company is taking off, it’s also important to learn that hiring people will reduce the burden on you and effectively increase productivity and quality.

 

Don’t make yourself indispensable

 

It’s natural to feel precious about your company, especially if you single-handedly founded it. The only issue with this is the question of who would manage the business if you weren’t able to. Of course, this is one of the last things on your mind when starting a business but if you’ve built a great company, why would you want to sacrifice it for the sake of pride and not letting go. Ensuring you have invested your time in others so that they too understand your business is paramount to the business’ success in the long run.

 

New and small businesses face tons of challenges every day, and if you can ride them out and see through the hard times, there are many rewards in both profit and pride stakes that will be achieved from learning and growing from both failures and successes.