5 Obstacles that New Businesses must Conquer
Most businesses start from a brilliant idea, a long overdue hobby, or a buzzing trend that is quite hard to resist. While everything may look promising at the initial stage of a new venture, there are obstacles which may hinder the company’s growth, if not taken seriously.
Skill and competence
Competence does not solely rely on one’s educational background. While it is an important factor, hands-on experience often matters more than technical knowledge. For example, a fashion designer may be well-skilled in creating clothes, but this may not be enough to open a clothing line. He/ She needs to learn how to be an entrepreneur, and acquire actual training on finance, marketing, selling, and management. In the real world, the ones who know how to sell to customers, how to manage budgets, and how to get along with people are the ones who usually succeed.
- Financial constraints
Surely, the new business owner may already have enough capital to start a business, but financial liquidity should be carefully studied before taking the risk. The ideal thing to do is to make a cash flow projection and plan how the business can survive during its initial stages. What will happen if the capital runs out while the revenue is still weak? Is there a plan B when there aren’t enough funds to cover the operating expenses such as utility bills and wages? From the first few months and throughout the first two years, the owner must know where to get additional funds. Whether it’s from his life savings or from borrowing from other sources, it is crucial to determine if the money will not push the company down in a sea of debts.
- Price determination
Lowering prices is what new businesses usually do in attempts of gaining customers and beating their competitors. However, doing so may do more harm than good for a starting company that needs a good revenue to keep the business alive. Extremely low prices may also affect the company’s image in regards to quality, as people may tend to view their products and services as cheap or mediocre. The key is to study the median price range of similar businesses and try to keep the rates competitive. By being competitive, it means offering a good quality product that is affordable and worth its value. It is also important to consult financial experts such as accountants and analysts to ensure that the value of your products or services will bring a fair return of investment.
- Time management
A new business owner might probably be juggling his company, household, and personal life all at the same time. To lessen the stress, it would be helpful to delegate other tasks to people who can be trusted. Hire a cleaner to do a weekly cleanup for the home, a nanny to take care of the kids, and an assistant to do the errands for the company. For other tasks such as bookkeeping, advertising, and delivery, outsourcing to professionals is a good way to save time, and on regular salaries as well.
- Marketing methods
Every business owner must know which marketing method works suits his/her business. The advertising technique should be within the budget as well, and it is important to remember that expensive forms of media do not necessarily equate great results. This means that, a new business can still get ahead in marketing by using affordable yet effective advertising methods. Leaflet distribution for example, is a good way to attract new customers because it delivers the information right into the hands of the target audience. The success of this campaign is more measurable than advertisements done through radio and newspapers.