Many Americans say they want to start a business sometime in their lifetime. However, many of these businesses do not go beyond the first few years. This is because of the many problems faced while running a business. In this series, we engage some of the top American business moguls to talk about the major problem they faced in the early years of their businesses and why it was not easy to overcome.
The question we asked them was: What has been the biggest challenge you faced in the first years of building your business and what made overcoming it so difficult?
Here’s what they had to say
Title: Head of Marketing
The biggest challenge you faced in the first years of building your business was that it is impossible to have too much money, but it is possible to have too little. In actuality, approximately 67 percent of existing small business owners describe inadequate financing as their greatest obstacle. Without a marketing degree, the world of marketing may appear difficult. In addition, 28 percent of small business owners concurred that marketing and advertising are their company’s second most difficult problem. Nonetheless, it is essential for the expansion of your organization. I have to deal with too many rivals in the same industry.
Title: Marketing Manager
If a single client makes up more than half your income, you’re an independent contractor. Diversifying your client base is important for business growth, but it can be tough when a client pays well and is on schedule. Many small businesses depend on clients that pay on time. Even if you have workers, you may still be a subcontractor for a larger company. This agreement allows the customer to avoid expanding payroll in an area where activity may dry up, and all of that risk is shifted to you and your staff. If your main client needs your product or service often, this arrangement can work.
Having enough cash to cover bills is essential for any business or individual. One will likely be a capital drain on your firm or life. Small business entrepreneurs must be well-capitalized or earn extra money to build financial reserves. This is why many small businesses start with founders working two jobs. This split focus makes building a firm difficult, but running out of cash makes it impossible. Cash flow makes money management more crucial. Most business owners can handle accounting and taxes, but professional help is recommended. Getting help with bookkeeping can prevent a company’s books from preventing growth.
Title: Product Manager
Company: Cheap Pills Store
I would like to answer you and share my experience about what we faced the challenges in the first year of building our successful business.
My answer is:
1. First of all, finding good and experienced employees is very difficult for every new start-up.
2. Find investors and maintaining their trust is also more challenging
3. Not every new business can not be profitable in the first year, so we have to wait longer to skyrocket your business
4. Maintaining relationships between managers, employees, and investors is the hardest challenge
There are many more challenges out there that every new business has to face but these are more difficult for us.
Title: Financial Analyst at OVERDRAFT APPS
Company: OVERDRAFT APPS
When I have so much to say, one of my major concerns has been “how to keep it short and simple.” The more succinct and concentrated your strategy is, the more likely you are to reach your objectives. Furthermore, establishing a realistic set of objectives that are in line with your strategy is essential.
Title: Owner and Director
Company: Compare TV
Inability to plan:
According to my experience, one issue that we all encounter is the failure to plan. The enthusiasm of a new business idea can make it tempting to begin without much forethought. However, a lack of planning might result in your company running out of cash or being unprepared for critical activities such as marketing or dealing with suppliers. Business owners who prepare ahead of time and establish goals for themselves are more likely to succeed.
How to Survive: Create a comprehensive business plan that addresses issues such as marketing, staffing, financing, and sales. As the business grows, review and update your plan on a regular basis.
Title: Senior Associate Attorney
Company: Mullen & Mullen
The biggest challenge during the first year of building a business is building the reputation of your business, service name or service brand.
When you start a business, nobody will easily trust your product. You start small to avoid losing big. But starting small, also to easily cater the demands of your very first customers or clients.
When you establish a good name for your first customers or your clients, they become a testament of how good your business is. They then become your referrals to other persons to try your product or service. This will continue until you establish your business name. There will always be issues with your clients and customers but do not forget that they are the ones that will keep your business going.
So make them a high priority for your services.
For me, the ultimate major challenge was managing our financial runway long enough to build the right product, cultivate relationships, and get to product-market fit. Product development takes time and capital to get right – and you may need to iterate a few different variations to get there. Make sure you have a plan or a path to fund yourself to get there, and be realistic. For us, it really took us three iterations or versions to get to a product that solves a clear problem for our target buyers. If we hadn’t been able to make it to v3, we wouldn’t be where we are today.
A scarcity of demand
One issue that we all face, in my opinion, is a lack of demand. Understanding the market demand for your product or service is an essential component of any business plan. Your start-up will fail if there aren’t enough people willing to buy your product or service, no matter how good your idea is.
How to overcome it: Invest time in market research to learn more about potential customers. This will disclose the size of your target market and assist you in determining whether there is sufficient demand for your business idea.
One of the biggest challenges that I struggled with at the beginning of my first few years as a business owner was making good recruitment decisions. This is because, when you are first launching a business, you can often find yourself in a race with yourself, as you try to get things done quickly.
However, I learned the hard way that recruitment is a process that demands a lot of time and patience because one bad hire is enough to create a negative impact on employee morale, productivity, and collaboration within the workplace, which ultimately results in having to deal with a toxic work culture. And this is something that always ends up pouring into performance, as well as customer service.
This was a mistake that set me back at the start of my venture and it cost me a lot of time and money in finding replacements later on. It is for this reason that I would often advise other young founders to always take the time to hire for cultural fit first because you can always train new hires to become better at their jobs, but you cannot train loyalty, empathy, teamwork and goodwill into an individual… that has to come with the package.
Lack of knowledge and skills:
One issue that we all face, in my opinion, is a lack of knowledge and abilities. As a first-time entrepreneur, you are unlikely to know everything there is to know about running a firm. A lack of expertise can lead to avoidable errors that can cost your company money. Setting up a business will also place significant demands on your time and efforts.
How to Survive: Assimilate as much information as possible, particularly about the business you’re joining, the customers you’re aiming for, and the competitors you’ll face. Read business advice websites, attend events, join business clubs, and seek mentors to learn about crucial areas such as finance, marketing, and sales.
Building a business requires a lot of effort, so you must be motivated and energetic. Being self-assured is advantageous. Our free Learn with Start Up Loans course on entrepreneurial behavior delves into the characteristics of a successful business owner.
Dr. Frederik Lipfert Lipfert
Title: Founder & CEO
Based on my experience, one difficulty we all face is that inadequate financial planning is one of the leading causes of startup failure. Your firm will fail if your costs exceed your revenue.
ACTION: You must understand all of the costs associated with your startup and ensure that your products or services are priced appropriately in order to turn a profit. Make a cash flow projection that predicts both your sales and your profit and loss. You can then forecast how much money comes in and goes out of your company.
Company: The Pricer
It was really hard to actually build a name around ourselves and make people trust our brand. We started off looking for an easy way up, presenting ourselves as a big and experienced brand, although we were far from one. It wasn’t until we actually started working hard and going through each step without trying to climb the ladder too fast that clients started to show up slowly and our name started to get heard.
Title: Founder & CEO
The biggest challenge in the first year of building my business is creating brand awareness to attract my target customer. As a self-funded business on a limited budget, without spending money on ads and PR, we had to get creative and scrappy to spread the word. Our strategy included using our network, participating in both in-person and virtual events and developing personal relationships with our early customers.
Company: The Stock Dork
Leadership is a difficulty that we all encounter, based on my experience. Your employees will turn to you for strong leadership as your start-up grows and you build a team.
ACTION: Define your company’s mission and vision. Inform your staff of this plainly. Employees should understand their objectives, as well as the overall goals of the company, and be fully committed to the company’s direction. Make certain that employees are kept motivated and that their well-being is taken care of.
Title: Director of Growth Marketing
Productivity and time management
Based on my experience, one challenge that we all face is time management and productivity. When starting a business, excellent time management is critical. Because new business owners must wear so many hats, it is easy to become distracted and focus on the wrong areas.
How to overcome: Planning is essential because it keeps you on track and focused on your objectives. You might easily wind up working in your business rather than on it, so set aside time each week to reflect and analyze areas that require improvement. Consider using time-management tools to make to-do lists that you can check off as you go. If you need to do an essential assignment, find a quiet place and turn off email, app, and messaging notifications.
Another method for better time management is to outsource tasks. For example, instead of developing your own website or managing your tax filings, hiring a web designer or accountant can be more efficient and cost-effective.
Title: Chief Operating Officer
The effect on your health
Based on my experience, one challenge we all encounter is the influence on our health. Running a business is not like working a 9-to-5 job. It can be all-consuming and take over your life if you don’t take care of it. You must take precautions to protect your mental and physical health.
How to overcome: Get plenty of rest and take regular breaks from work. Take pauses throughout the day, eat sensibly, and exercise often. Having a co-founder shares the burden, and attending networking events and business groups can connect you with other business owners who are facing similar issues.
Title: Founder/Managing Attorney
Company: Jurewitz Law Group
When I first started my law firm in 2007, I was under no illusions that it would be difficult to begin with and that things would probably be slow for the first couple of years. What I wasn’t quite expecting was how tough being a boss was going to be. I hired a few attorneys that I had as contacts from previous work, and who I knew would be able to work in a team well. I had the grand idea that I was going to be a cool boss, a “just one of the guys” boss, and the most challenging thing was realizing how ineffective that can be. Things need to get done, difficult decisions have to be made, and someone has to be the bad guy sometimes. It took me a while to figure it out and it was definitely one of the biggest challenges I faced in those early years.
Company: Prestige Homebuyers
I faced many rejections, people who doubted me and mistreated me, but it all shaped me and prepared me for who I am today. So, I made sure that with each obstacle, I learned something from it, not to commit the same mistake and always to know that there’s someone out there that’s doing the same as me, if not more, and they were given fewer resources at their disposal. Because of this, I am always grateful.
In our business, there was a time when I had to make one of the most challenging decisions I’ve had to make, cutting down on some of our marketing expenses because our overhead was getting high and the ROI wasn’t where we wanted it to be at. It felt like we were taking a couple of steps back, which was discouraging at first. Still, it allowed us to dial in on what we currently had in our database and eventually create a stronger foundation to scale again.
Title: Technical Director
Identifying Customer Demand:
I believe the most challenging part of launching our first business was determining consumer demand. The correct procedures were to describe the problem, conduct various market surveys, aggregate the results of both primary and secondary research, and finally capitalize on the opportunity. It’s simple: if you can’t demonstrate the need for your product using real facts, it won’t reach the correct people.
Title: Owner of Biking KnowHow
Company: Biking KnowHow
Hello, I am a marketing consultant and an established entrepreneur. I run a successful Niche website called Biking Know How. I would like to share how I quit my job as a banker at JP Morgan Chase and started my blogging business and turned it into a successful business. I started my blog just as a hobby. I scaled my business, especially during the challenging COVID pandemic, and made it profitable in a short period (From the first month itself). I focused on doubling down my efforts on growing my niche website, which was initially just my passion project. I would say that my online business has helped me stay occupied, motivated, and financially stable.
I love the outdoors, biking and camping. I always wanted to share my unique experience with people. Initially, I would maintain a diary and would write about my outdoor camping endeavors. Thanks to social media and my website, my audience over time has increased significantly. With social media and my website, many more people can access my adventures and plan their own. This gives me immense joy and fulfillment.
Some of the details on my blog are as follows.
1. Bikingknowhow.com is my third blog (I run 2 blogs currently, all in different niches. I sold my first blog) that I had started. And it today gets approximately 5,000 monthly unique visitors. I earn money through two Ad-Networks namely, Google AdSense and Media.net which show ads on my website. (I make a minimum of $200 per month with both ad networks combined).
2. I also partnered with Amazon via an affiliate partnership, and I promote the products and services of Amazon on my website (I make approximately $100 per month) by promoting products on my blog.
Challenges: As far as the hardest part or challenges are concerned, I had to face many, but two challenges stand out the most. They are as follows.
1. Time Management: This was a very significant challenge because I was managing and growing my blog while having a full-time job. I would use my weekends and holidays to educate myself on skills, especially web development and digital marketing. My blog allowed me to have multiple streams of income. As I saw decent cash flow coming in, I was interested to upskill myself on digital marketing and social media. I knew this would require my time and dedication. So, at every opportunity that I got to polish my skills, I made sure that I dedicated my time and attention to get better.
2. Getting Right Education: Well, to educate and polish my skills in digital marketing, I enrolled in many digital marketing and web development courses. I used courses like Authority Lab and Nite Site Project to teach myself affiliate marketing. I started voraciously reading blogs and success stories of affiliate marketers as I found them very inspiring. This helped me get creative and experiment with the growth strategy of my blog.
Title: Founder/Lead Attorney
Company: Jonathan R. Brockman, P.C.
I started my own law firm in the early 2000s after working in the industry for almost a decade. One of the most challenging things that I faced during the first few years was the sheer amount of logistics that go into building a business, securing clients, and running an office. I had thought, perhaps naively, that I would start my firm and the clients would find me, but that’s simply not true. It’s a lot of graft, and a lot of grovelling in the first few years – but, if you do it all right, by the end of the first five years you should have built a loyal client base.
Company: 3d PR and Marketing
Finances was definitely the biggest challenge. I learn from experiences, and mistakes aren’t cheap. Starting a brand while being unemployed still seems like the wildest thing to do. – Mugzy McFly, of Signed by Mcfly (black owned fashion business based out of Brooklyn, NY)
Title: Founder & CEO
The biggest challenge at the start of building my business was embracing the aspect of delegating work. When you start a business, you are the primary person who does the output work. When the business matures, you then need to transition to an operator who then offsets responsibilities. The final stage is moving from an operator to an owner who works primarily on strategy and executive level tasks. It’s easier said than done.
Moving across these areas can be challenging but the one commonality among the three is that each requires the ability to delegate and the sooner it is done, likely the better the organization will be able to scale in the future.