25 Oct, 2017

The Challenges of Starting a Business from Scratch

“Starting a business is like jumping out of an airplane without a parachute. In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.” – Rich Dad

 

Indeed, starting a business from scratch is not a joke. It involves money, effort, tough planning and legalities. If you are planning to start your own business, it will be helpful to study it thoroughly. Conduct some research, study the current market, study your target audience, learn more on how you will market your business.

 

Listed below are the five challenges that entrepreneurs normally face when starting their own business from scratch:

 

1. Developing the business idea

 

“A good businessman must have nose for business the same way a journalist has nose for news. Once your eyes, ears, nose, heart and brain are trained on business, you sniff business opportunities everywhere. In places where people see a lot of obstacles, I see a lot of opportunities. At times, there is something instinctive in me that tell me a business opportunity exist even at a place where others see nothing. That is what makes me different, maybe unique. A good businessman sees where others don’t see. What I see, you may not see. You cannot see because that is the secret of the business… the entire world is a big market waiting for anybody who knows the rules of the game.” – Orji Uzor Kalu

 

Developing a business idea is normally  the first challenge faced by every entrepreneur when starting a business from scratch. Looking for the right business opportunity, creating the perfect system, and building a great business idea are not easy. As an entrepreneur, you must possess the ability to see what others cannot see. While others see problems, you must see the brighter side - opportunities.

 

However, seeing the opportunities is just the start. The main challenge is how would you turn the opportunity into a great business idea. You should see the opportunity as a gateway to a successful business plan. It should lead you to gold. You should create value out of it. Indeed, the process will not be easy.

 

“If you want to be rich, you need to develop your vision. You must be standing on the edge of time gazing into the future.” – Rich Dad

 

Developing a vision is definitely a business challenge. The entrepreneur must develop the solution out of other people’s problems. It should be relevant. It should be timely. It should evision and forecast what the future will be.

 

“Business is going to change in the next ten years than it has in the last fifty years.” – Bill Gates

For instance, In the late 70s and early 80s, while IBM saw the increase in demand for their mainframe computers, Steve Jobs envisioned a personal computer in every home and Bill Gates envisioned the need for easy to use software for personal computers. That single vision made Bill Gates the richest man in the world and Steve Jobs the most famous business person of the 21st century.

 

Isn’t it amazing?

 

2. The need for a capital

 

After developing your business idea, the next tough challenge is raising the capital. Surely, you can use your life savings, if you have one, however, you should still plan on the various expenses that may incur; attorney fees, rentals, utilities, payroll, equipment, and others. Moreover, a startup business may not profit that much during the first few months or even a year, hence you should be ready with the needed funds, or your business may go down the drain.

 

“If you want to know the value of money, go and try to borrow some.” – Benjamin Franklin

 

One way of raising a capital is to look for prospective investors that may be interested on the products or services that you offer. Trying to convince investors about something that doesn’t exist is definitely another challenge. Thus, convincing someone to invest on your business idea is difficult. However, if it will be a success, it will definitely ease the pain and hardships of paying everything out of your own pocket.

 

“Capital can do nothing without brains to direct it.” – J. Ogden Armour

 

3. Creating the right business team

 

The third business challenge you will face in the course of starting a small business from scratch is assembling the right business management team. A business team is different from “hiring the employees”. It is what we call, the “round table business team”; the heads of the business, the brainstorms, the people who will lead and help your business on the way up.

 

“Individuals don’t win in business, teams do.” – Sam Walton

 

The process of building a business team should start even before the process of raising the capital. It is fact; most brilliant ideas and products never get funded because the entrepreneur is trying to raise the needed capital on his own.

 

Creating the right business team is crucial on your business success. It is the key in raising the needed capital for your business.

 

“Business and investing are team sports.” – Rich Dad

 

4. Choosing the right customers

 

Is finding a good location a business challenge? Yes it is. Your business should be visible. Your business should be near to your target market. However, finding the perfect spot is always not easy. How do you get a location that has a rapidly growing population and other amenities at a good price? Difficult, right?

 

Last but not the least is, reaching out to your target market.

 

Always remember that In the process of building a business, you will come to find out that there are good customers as well as bad ones. You must be on guard for the latter. Good customers are not easy to find. They are the ones who will be loyal to the services and products that you offer.

 

“Thank God for my customers. They buy my products before they are perfected.” – Henry Ford

 

On the other hand, bad customers are the ones who are always looking for the loopholes on your products and services. They are the ones responsible for the bad debts. They will not help in building your business, instead, they will liquidate it. Same as with firing your bad employees, bad customers should then be “fired” too without hesitation. Just take note of the instance when a “customer” sued McDonald’s for its coffee being “too hot”.

 

“You must fire bad customers just as you would fire a bad employee. If you do not get rid of your bad employees, the good employees will leave. If I do not fire bad customers, not only will my good customers leave but many of my good employees will leave as well.” – Rich Dad