There is no joy that quite equals that of starting a new business and watching it grow. Yet, the entrepreneurial journey is one that is prone to rocky roads and high mountains to scale. Not many business ideas turn into long-term successful ventures. So what are the challenges of starting a small business? Let’s explore.
Challenges are common hindrances that prevent entrepreneurs from developing their business or scale their micro business into a profitable enterprise. These can be numerous and solving them isn’t easy.
A start-up will have internal and external factors that is preventing it from developing into a fully fledged business.
In this article, we will look at the internal and external challenges entrepreneurs face when starting a new business.
Internal Challenges of Starting a Business
Internal challenges are those that the business owner or management team has a degree of control over. These challenges are easier to overcome than external challenges. Here are some common internal challenges:
Cash Flow
Cash flow struggles are an internal struggle that many businesses face, especially when starting out. Should a business open its doors, all of its capital might be tied up in purchased stock and business assets, meaning that there can be a lack of cash flow should unforeseen expenses arise.
Work-life Balance
No one knows the hustle better than entrepreneurs. Working to make your business a success is a greatly rewarding experience, but the cost is often needing to spend more time working than focusing on your personal life (family life and me-time).
Managing Growth
Managing growth comes naturally to some, however, other entrepreneurs need a bit of guidance. Growth can be expanding business, increasing employees, or scaling operations.
Working with a mentor can greatly impact the succcess of your business.
Digital Growth
Digital growth within a business can be a challenge for employees to effectively complete their jobs. This is often due to the rate at which technology develops. It is vital to balance technological advancements with expenses.
External Challenges of Starting a Business
External challenges are factors that business owners have no control over. These are usually socio-economic issues.
Competition
In a recent BusinessTech survey, competition was listed as one of the biggest challenges for South African entrepreneurs. The threat of competition exists because many business ideas that are similar might pop up simultaneously when individuals recognise the same trend. Similarly, if too many competitors are in a small area, then the location might lead you struggle out selling other businesses.
Economic Climate
Most businesses struggle and fail due to the current economic climate. High inflation and living costs also affect how much businesses spend, as well as how much consumers are willing to pay for certain products.
Navigating Regulations
Businesses need to be compliant with their industry regulations. This will differ from industry to industry, meaning there is no one-size-fits-all approach. Technical legal jargon can be hard to understand, leading to entrepreneurs misunderstanding or misinterpreting the legislation. Working with an expert in compliance, however, can assist with navigating the regulatory minefield.
Cybersecurity
Cyber crimes are a huge threat to businesses, and most busineses are unprepared for the attack. Cybersecurity is thus vital to protect customer data, maintaining your reputation and preventing financial loss.
Skills Shortage
South Africa has a huge skills shortage, especially in technical fields. Businesses can address the skills gaps their workers have, but it is challenging to hire unskilled workers if your business cannot yet afford to invest in developing employees.
Funding
Raising capital for your start-up is one of the most common challenges, yet it is not always the biggest. The old adage that you need money to make money rings true here, but once you are able to convince potential investor(s), the battle is half won.
The entrepreneurial journey with all its challenges still remains one of the most attractive ways to earn an income. Anyone with an entrepreneurial spirit needs to be aware of the challenges of starting a business before their journey commences. But for those who make themselves aware of the risks and choose to find ways to persevere, the rewards is great.
Now that you are aware of the challenges you might encounter, explore our Guide to Starting a Business in South Africa.
