Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

Start-Up Business Problems and How to Fix Them

Written by Erik Larson, Community Blogger | Sep 20, 2017 5:30 PM

New businesses go through many different problems. Owing to the fact that no business is exactly the same as the other, the entrepreneur has to come up with a way of solving the specific problems to keep them from ruining the business. It is the failure to deal with these problems that causes the vast majority of new businesses to collapse within a year of being established. Although the solutions for these problems are different for different businesses, there are certain pointers that can help a business person keep their venture afloat. The following are some of the problems and suggested solutions.

Poor or No Market Research 

Most people identify a need before starting a business. Unfortunately, many of them also make the mistake of assuming that recognizing that there is a gap at face value eliminates the need for comprehensive market research. Failure to conduct market research leaves the business unfocussed and hence incapable of achieving success. This problem can only be solved through conducting market research. When market research is conducted on an established business, it provides the entrepreneur with the information on which aspects of the business to eliminate, which to introduce, scale down or expand. 

Failure to Network 

Many entrepreneurs take the 'going it alone' phrase literally. They fail to ask for advice or share their vision and mission with people who matter. This leads to a situation where they do not benefit from the great pool of wisdom and experience available in other people. The solution to this problem is for the entrepreneur to carefully identify people who have the experience that aligns to the vision and seek them out. People who have been through the journey of entrepreneurship have insight into solving some of the problems that a new entrant would inevitably face from time to time. Networking with entrepreneurs in the same industry is useful in other ways also.

Lack of Access to Credit 

Many leaders prefer doing business with established businesses. This is because start-ups are considered high risk customers. They normally have little or no credit history. To beat this barrier, a start-up should have a well thought out business plan which a financial institution is likely to consider viable. Once the plan is in place, the entrepreneur should approach carefully researched financial institutions for financing. The best banks for new businesses are those that have products that are specifically tailored for startups. It is not uncommon for a startup to default on loan payments. This leads to poor credit rating which makes access to credit more difficult. In case this happens, an entrepreneur should not write themselves off where seeking credit is concerned. There are companies that can facilitate small business loans for bad credit by offering credit repair services. There are also some types of small business loans that are available even with a less than impressive credit history.

Ignoring Competition 

While it is important for an entrepreneur to be focused, it is also important for them to have an eye on the competition. This is because competitors are always trying to outmaneuver each other. Failing to counter their moves will in all likelihood lead to loss of customers. The solution to this problem is or the entrepreneur to always keep their ear on the ground concerning the activities of the competitors. Focus should be on the competition's products, their advertisements, their niche, future plans and so on. 

Agreeing to Unfavorable Terms with Suppliers and Creditors

An entrepreneur in a startup should learn to negotiate deals to their advantage. If they do not engage themselves fully in getting the best deals from other stakeholders. The solution to this problem is for the entrepreneur to prepare themselves thoroughly before meeting a potential partner to negotiate a deal. It is not right to assume that a customer asking for a big consignment will pay, it has to be ascertained that they indeed have the capacity to pay. Suppliers should also be researched and the best possible deal identified in advance. An entrepreneur should never attend a negotiation unless they are sure that they are suitably prepared.

Starting and running a business while liberating requires total commitment from the owner and their team. Everything that gets done in the interest must be carefully thought out and planned. The result of such hard work is the satisfaction of seeing the business grow.

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