February 2, 2020
Even if you’re a successful entrepreneur with several companies under your belt, no amount of experience completely removes the challenges of running a business. Whether you’re embarking on your first venture or you’re a seasoned leader, you’ll likely deal with these five common obstacles. Here’s how to navigate them.
1. Cash Flow Concerns
While this is a concern for new and established businesses alike, if your company has been around a while you no doubt have mustered through this difficult period. But if you’re thinking of starting a new venture and it’s your first, there’s an expression some savvy business consultants use when counseling new businesses: “Dig your well before you need it.”
Why? Because clients pay late and more often than not, it will be at the worst possible time.
When just starting out, if possible, keeping your day job until you are cash flow positive is probably the safest and smartest decision you can make.
By all means, take that leap of faith into startup-hood, but make sure you have enough water in the well in case of an unforeseen drought.
By taking this approach, you will have the time and resources to make your business viable with sustainable, organic growth. You will have the flexibility to pay both your personal and business expenses, and you’ll be able to take a more thoughtful, comprehensive approach to building a business plan and road map that will get you from point A (where you are currently) to point B (where you eventually want to be).
2. Keeping It Legal
Every business needs a few specific folks right from the start. Hiring an accountant, bookkeeper and lawyer that you can trust should be priority one for every business, especially during the early stages of a new business venture. While there are inexpensive services you can use, such as LegalZoom and Bizfilings.com, for preliminary paperwork, it’s crucial to have experts available to protect your interests.
An accountant/bookkeeper will keep tabs on your company’s financial ins and outs. Even in the era of QuickBooks, you really need a seasoned pro who understands all the financial nuances and pitfalls that may face your company. A lawyer, preferably one who has experience in your industry, will help you make company policies that comply with local laws and industry regulations. The latter is critical if you plan to operate in industries such as healthcare or financial services, which have strict regulations like HIPAA and FINRA, respectively. Seek out attorneys with strong business and/or regulatory experience and if possible put them on retainer. Think of them as insurance policies for your business. How can you afford them? The question is how can you NOT afford them?
Speaking with local municipal business development offices or finding the appropriate organization from many of the entrepreneurial associations, meetup groups and accelerators that exist today to understand the legal landscape is also a good idea. You can never be too informed.
3. Whether To Trade Equity For Services
Borrowing money with the mindset that paying it back is tomorrow’s problem is a recipe for disaster. You can equate this to an alcoholic who drinks in the morning to get rid of last night’s hangover. “The hair of the dog” may be a casual expression, but this dog bites . . . and probably has fleas . . . and rabies.
It is far too easy to get caught in a cycle of mounting debt with no way to pay it off.
Most entrepreneurs start out with little to no money, which makes them huge targets for predatory lenders and other people who will offer you the sun and stars in exchange for a percentage of your company. Don’t fall for it.
Talk to trusted financial professionals. Beware of unsolicited offers. Understand interest rates and fees, and avoid overpromises. And most importantly, don’t rush into anything just because it has one dollar sign instead of three.
4. Shiny Things Disguised As Must-Have Technology
Use technology to your advantage, but don’t be distracted by shiny things disguised as must-have solutions that supposedly will take your business to the next level. Remember, if something seems too good to be true, it probably is.
Organizations introduce new approaches and drive change for sound reasons. Adding something new is not a bad thing, as long as it’s a productive change that is actually beneficial to the organization. Changes must be well conceived and include background analysis and detailed execution plans.
A trusted business consulting firm like Louis Mamo & Company can help you make the right technology decisions for your company or organization.
Shiny-object syndrome comes into play when ideas are plucked out of thin air and have not undergone the aforementioned rigorous process. Essentially, they displace a previously agreed-on and well-vetted plan.
Do not easily abandon proven strategies that generate measurable returns in favor of new, shiny ideas that “might do better.” Don’t be caught with your planning pants down.
You must also know if your team has the technical chops to operate and integrate whatever tool you want to introduce. Regardless of how seamless a company’s marketing team says integration is, it’s hard.
Do it gradually. Start with Excel or Google Sheets before you jump to Salesforce, Marketo and the like.
5. Position Yourself
Have a solid positioning statement. Know the value you bring to the table, and play it up. Why should people spend money on the product or service you’re selling? Not sure how to do this?
Your positioning statement tells your clients and prospects how you are to be perceived in the marketplace. It outlines the benefits of doing business with your company and why the value you’ll provide them is unique.
Your statement should focus on what you do, who your audience is and the unique benefit for your clients. This, in turn, will help you keep your eye on the prize and keep you from straying off course to ogle the shiny objects your competitors are touting.
Stay the course. Your successful self will thank your startup savvy down the road.
Need a financial professional to help keep it legal and a marketing guru to help create your positioning statement? Louis Mamo & Company can help. Contact us at any time to discuss your business needs.
(Sources: Forbes and Phone.com)