5 Challenges You Face In A New Business
Starting a new business is all about survival. You are managing and working month to month for the first three years at least. There are several challenges that are going to present themselves along the way in your start-up new business.
Here are five of them:
1. Cash Flow
More than one company has closed it’s doors drowning in revenue, unable to pay it’s bills. Managing cash flow means you have to have an acute understanding of how much money you have on a day to day basis to pay the bills. This is of the utmost importance to keeping your company afloat and sailing. I can’t tell you how many companies I have seen sink because there was no knowledge of how much cash was in “the cigar box” to pay expenses.
2. Chaotic Periods
The ability to manage rapid periods of change is key to keeping a new company going. If you get stuck into a certain way of doing business too early on, you lock yourself into a box of which there is no escape. You need new ideas and they need to be tested. You have to master a proof of concept process in order to master the change cycle. Without this, you get swept into irrelevance to the market and out of business.
3. Too Slow Getting Products/Services Into The Marketplace
The better you are at managing cash flow and chaotic periods in your company,m the better you will be at getting your products and services to market. Having adequate process for this is imperative. As Seth Godin says, “you must be able to ship”. Your sales and marketing efforts are a process and if it’s broken or not being followed correctly, this can be a big issue.
4. Limited Capital
Cash is the life blood and growth sucks cash. The more you grow, the more cash you need. There is a tendency for leaders to be short sighted when it comes to evaluating the amount of money the company will need to have a solid start and remain healthy as growth occurs. Anyone who has had a growing child knows the refrigerator is often empty. The same occurs with capital reserves. You need a good banker you can trust and talk to about capital needs.
5. Expanding Sales
This is a killer for many small businesses coming right out of the gate. They have little to no sales expertise and they can not take advantage of early momentum or grow when times get tough. Expanding sales starts with a clear vision of what problem your company solves and for whom. It starts with a belief your product or service is so good, people can not do without it, or it would make their lives much easier.