SME Tips

Top 8 Entrepreneurship Challenges and How to Overcome

December 9, 2021

The entrepreneurship challenges of today’s world are undeniable. Luckily, there are a plethora of resources available to help you overcome the significant difficult obstacles.

The following 8 difficulties are everyday struggles of entrepreneurs. Don’t fear; we’ll walk you through in-depth solutions to all of these problems, so you can be better prepared to operate your business into the future.

Challenge 1: Handling Financial Uncertainty

The challenge: The year 2020 taught us many things: 20 seconds really does matter when it comes to washing your hands, and financial comfort is never certain. Budgets created in 2019 aren’t applicable anymore.

In today’s market, with inflation on the rise and the uncertainty of COVID playing a hand in the market, entrepreneurs need to embrace financial uncertainty confidently. Handling monetary uncertainty is one of many significant challenges entrepreneurs face when starting a business.

The solution: There are various ways to overcome this entrepreneurship challenge and acquire funding for small businesses. Here are the highlights:

  1. Grants. If you qualify -- and you likely can if you’re a minority founder -- grants are free money. Who doesn’t love that? Look for broader grants but also state-specific or even more hyper-local grants. The amount will be smaller, but the hassle much lower, and you should find more options.
  2. Loans. Depending on your credit score and the interest rate you’re comfortable with, you’ve got options for loans. If you’re in the US, SBA loans are secured by the U.S. Small Business Administration, and you’ll get low interest rates, low down payments, and favorable repayment terms. However, approval often takes a while. You could also take out a line of credit or use credit cards, but make sure you can pay the money back on time.
  3. Personal assets. Depending on your risk appetite, you may be able to leverage your personal assets, or sell them, to fund your business. You get complete control of fund allocation and won’t assume debt.
  4. Angel investors. Know someone interested in your company? See if they’ll invest. Angel investors don’t require repayment; instead, you’ll give them a stake in your company and, if it does well, they’ll make a return.
  5. Crowdfunding. Looking for investments from a variety of people? Try crowdfunding. And, if random strangers on the internet are willing to fund your idea, that likely means it’s viable.

Perhaps more important than acquiring funding, to handle financial uncertainty, be conscientious about preparing an emergency fund. Allocate money towards it each month, and be prepared for a few months of no cash flow or a sudden emergency expense.

Looking for a fast, fair, and flexible source of funding? Whether you need crowdfunding, a small business loan, a line of credit, or anything in between, Rayl will soon be able to get you approved quickly. Learn more today!

Challenge 2: Delegation

The challenge: Most entrepreneurs struggle with delegation, which is one of the top entrepreneurship challenges. Why do we struggle with this? Well, many of us tend to be perfectionists, and whatever it is we’re working on is very important to us. It’s hard to let go of control and trust other people to do the job right.

Unfortunately, you only have so many hours in the day. Anything that’s outside your “circle of genius,” aka anything you’re not a complete expert at, needs to be delegated once your business reaches a certain threshold.

The solution: When thinking about overcoming entrepreneurial challenges, start broad. In this case, figure out what’s inside your circle of genius.

If you’re best at leading people and scaling businesses, keep ahold of those parts of growing your company. Alternatively, if you’re an excellent accountant, continue to monitor your business’ finances and don’t outsource that to an accounting firm.

Anything outside your sphere of genius? Delegate it.

Challenge 3: Hiring the Right Employees

The challenge: Remember how we said in challenge 2 that you need to delegate? That’s wonderful, but one of your top entrepreneurship challenges may be figuring out how to hire the best people!

The solution: First, make sure you need an employee. While we’re all about delegating tasks outside your sphere of genius, hiring and keeping employees is costly. Make sure you need to outsource, and then proceed.

Next, decide whether you want to bring on a contractor or an employee. Employees tend to work more hours and work only for one company, but they will need benefits and a full salary. Which type of worker is better for this role?

You’ll also need to know some nitty-gritty details, such as your EIN (apply here) and business tax requirements for hiring employees. If you’re paying attention, you’ll already know that unless you’re an expert at it, you should delegate this tax stuff.

Challenge 4: Retaining Employees Long-Term

The challenge: In today’s market especially, we’re experiencing what some coined the “Great Resignation.” In August of 2021, 4.3 million Americans quit their jobs, and more than half of US workers surveyed by CNBC said they planned to look for a new job in the next year.

The solution: Even if this resignation subsides, retaining good talent is an infamous entrepreneurship challenge. There are simple steps you can take to keep your people happy:

  • Offer flexible work options
  • Be accomodating of personal emergencies
  • Give respect for work-life balance and personal time
  • Constantly ask for employee feedback -- how can you as the business owner improve?
  • Reward your top talent with thank you notes, lunch out, or a care package
  • Prioritize mental health -- check-in with your employees and offer wellness opportunities
  • Offer professional growth opportunities and upward career growth at your company

Keeping your employees around means respecting them professionally and personally and working hard to see them succeed.

Challenge 5: Managing Cash Flow

The challenge: Cash flow needs to be well-managed for any business to succeed. Bills need to be paid, and cash flow needs to move upward over time (although it’s okay to have some “loss” months). Yet, one of the top entrepreneurship challenges out there is business owners struggling to pay the bills, let alone themselves.

The solution: Sit down, roll up your sleeves, and get to budgeting! No business can succeed in the long term without a proper budget.

Here are some solutions to try alongside budgeting to boost cash flow:

  • Require down payments for your goods or services
  • Make invoice times quicker. They should come due within 1-2 weeks
  • Ask vendors to invoice you in regular, longer intervals (such as 90 days)

Need the proper tools to manage your cash flow, including bookkeeping, expense and purchase tracking, reporting, and more? Rayl will soon be able to help with all that and much more.

Challenge 6: Picking a Niche

The challenge: Niching down is a common entrepreneurship challenge because many new business owners feel the need to appeal to everyone. After all, if you close your doors to potential customers, won’t that cost you business?

The solution: In reality, selling to everyone is like selling to no one. Customers need to know you understand their needs and are experts at solving them. You want to position yourself as an authority for a smaller group of people who can then trust you and buy from you.

Figure out your ideal customer profile (ICP) and build solutions and marketing efforts for them. Understand their pain points closely.

Importantly, make sure the niche you choose is a growing one. Some niches, such as paper news, photofinishing, book stores, libraries, and archives, are dying as we progress through the 21st century. Some profitable niches include cryptocurrency, biotech, fintech, and more. Make sure you pick one that’s on the uptick.

Challenge 7: Time Management

The challenge: Time management will always be among the top entrepreneurship challenges. Entrepreneurs often work long hours and are constantly putting out fires. All this can leave you frazzled and unsure of how to manage your time.

The solution: When you think about overcoming entrepreneurial challenges, managing your time should be at the top of your mind. Here are some solutions to try:

  • Automate where you can with apps or tools (automated invoicing, reminder apps, time tracking software, etc.)
  • Build self-care into your calendar -- contrary to popular belief, entrepreneurs can’t work 24/7
  • Time block
  • Avoid time wasters such as social media
  • Delegate (we already touched on this!)
  • Hire a virtual assistant

Most importantly, remember that taking time for yourself and resting is as essential to business success as working hard. Avoid spending all your time building your business; some of your biggest breakthroughs will happen when you’re thinking about something else.

Challenge 8: Self Doubt

The challenge: Almost every entrepreneur frequently thinks: why me? How can I possibly accomplish this? Self doubt is an enormous entrepreneurship challenge, and you need to be equipped to handle it.

The solution: Find a robust support system, including family and friends, and lean into them often. Additionally, if you’re feeling down about your abilities, get to work! Ticking things off your to-do list and making results happen helps fight the imposter syndrome.

Further, find entrepreneurial friends. You can commisurate and offer each other advice.

Ultimately, Entrepreneurship is Hard (But Worth It!)

Hundreds of thousands of words have been written on common entrepreneurship challenges. Ultimately, understand that entrepreneurship is hard, and there’s no way around that. But, for most, the payoff is worth it. Besides, you’ll learn a lot about yourself along the way.

We wish you the best of luck!

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