The Problems Faced by Entrepreneurs while Starting New Business is high | Regular Challenges: Nigerian Entrepreneurs face a lot of challenges in business regularly, especially the young ones. Entrepreneurs are being encourage not to give up but take up these challenges as entrepreneurial projects.
That means they should see them as a task that must be overcome. With clear focus and dedication these challenges are overcome. Trust yourself, ask for help. Avail yourself of government an civil society help platforms.
Some of these challenges are:
1. Insufficient Capital
Lack of capital is a plague to many start-up businesses.
Sources of start-up capital are: personal and family savings, partners contributions, investors fund (seed /angels capital), bank loan (money market), government grants, NGO grants.
As the business grows other forms of capital that will be very necessary are: bank overdraft, credit facilities, investors from capital market ( venture capital) , etc.
An angel investor is an affluent member of the public who privately provide fund for businesses at start-up as equity stakeholder in the business.
In Nigeria today, there are government programs that provide funds for small scale entrepreneurs as revolving loan. Many None Governmental Organisations (NGO) do the same, some times an outright gift for the poor and the indigent members of the public
2. Weak Management
The knowledge and skills of a creative entrepreneur do not necessarily amount to being an efficient manager. One can be creative, and productive but is weak in coordinating the other factors of production. He may not also be a good marketer. Where goods/services are there but are not translated into cash/turnover, the business will suffer cash flow problems which is essential part of the business working capital. A weak management team will give rise to inadequate business plans, goal settings and poor tactical/operational performances.
3. Lack of a Good Management Team.
Associated with the above is total lack of management team.To build a management team requires experience and hard work. This will involve finding the efficient staff at cheap cost, role definitions – schedule of activities, staff training. It is to find the second in command. It is motivating every member of the team to work together as a team. Where management team or anything like it is totally not in existence, there is no need of talking about weak management.
4. Lack of Entrepreneurial Roles in management:
The entrepreneur will certainly be part of the management team, but there are certain things that must be left for him alone. He has to be the:
- Visioner: as a visionary leader he/she should be able to see the today and tomorrow of the business and so design it. He should be able to plan the growth and maturity of the business. In that case should be able to answer the following question; How long will your business exist? He should be able to plan the business exit early enough especially put a succession plan in place.
- Rule maker : He/she has to make rules which the business follows. He has to make industrial relations rules ranging from production or service delivery rules to labour relations as quality of staff, vacation conditions, and administrative routine procedures. In relation to corporate governance, these rules are not easy to make.
- Decision maker: Entrepreneurs make hundreds of decisions a week. A special fatigue called ‘decision fatigue’ could be very stressful.
These are special challenges which the entrepreneur faces everyday. Where they are not properly taking care of, they posse big surviving threats.
5. Ineffective Marketing:
Effective marketing means;
- Good market research/feasibility studies,
- Good advertisement at low cost per unit,
- Good market trend watch – market size, turnover, price, market openness - how easily new products are introduction
- Good competition watch
- Good product quality and price
- Good inventory policy
- Good Inclusive demand and supply side value chains management,
- Also building an effective all inclusive synergy in the production processes to feed the market,
- Reasonable profit margin
- Good industry watch.
Traditional marketing mix elements of product, pricing, promotion and distribution in addition to modern market strategies of mega-marketing, demarketing and relationship marketing should be appropriately utilised.
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6. Being a Novice:
Industry knowledge is very important to business survival. Every business has one or more secrets that keeps it going. Certain industry may require some basic professional education. For instance, you can not practice law if you are not a layer. In the same vein you can not practice accounting, auditing and tax management if you are not a Chartered Accountant.
A novice will face more challenges and may end up wasting so much resources before packing-up. A good approach is to hire an experienced staff.
Inability to abandon ones career.
Starting a business and watching it to maturity demands personal attention. Unless in certain countries of the world where corruption would allow one to own business outfits outside his/her career, and which he/she feeds officially. In such cases it pays to maintain ones career and continue to use the business outfit as a financial conduit. If you are a normal person, for your business to grow, you have to be there personally. Weekend attentions will not be enough. You have to quite your official wage work.
A friend of mine wanted to start a consultancy firm in partnership with a civil servant, but somebody advised against doing a business with a serving civil servant because he will not have the time needed for the business. My friend had to realise this after two years of fruitlessness.
7. Legal matters:
Country’s industrial laws some times posse serious threat to businesses. Such matters like foreign exchange policies, other monetary policies, and fiscal (tax) laws, could limit an entrepreneurs activities ( economic recessions and booms have always been as a result of these policies one way or the other). Environmental laws also are important. In attractive industry - both in oil and gas sector and solid mineral sector, environmental laws are very important.
Labour laws and the judicial system in this relation, could deter economic progress, and therefore is a big challenge to entrepreneurs.
8. Politics:
This is seriously becoming a serious global economic challenge especially where it has some religious inclinations. An example is the resent immigration laws being introduced in US by the present President Donald Trump. Belief me a lot of businesses will be affected by this. This can breed security challenges. Businesses don’t do well in a state of insecurity.
9. Good governance:
Generally good governance detects the tone of business in every economic setting ( country/state). Good governance promotes even development, good economic policies, good educational system, rule of law, even distribution of income, good infrastructural development (especially in provision of electricity and good road), etc. The point is that where this is lacking, the economic or the industrial community suffers.
These few last points do not actually rest on the entrepreneurs efforts. But we know that the civil society organisations all over the world are doing so much to mount pressure upon governments to implement policies that will engender economic growth.
We encourage entrepreneurs to outsource some of their functions for efficient management o resources. Our team of experts will make the difference in your business. Contact us for your business challenges and we will prepare/draw a Professional Business Plan for you.