10 Challenges Business Face And How to Deal With ThemApril 23, 2019
1. Finding your team
As a start-up, you need people to run the show with you but it is often difficult to afford them. You need those who can wear multiple hats and are able to work independently.
However, these people are often the best in class in their industries and most likely wouldn’t want to take a pay cut or risk their career path.
Tap into your network of family and friends to identify talents who are open to change and adventure. Giving employees ownership of the company through Employee Stock Options also helps to attract talent.
2. Know how money flows
Knowing the regular profit and loss statement of the business is not enough. Although it may appear that you are breaking even on paper, it doesn’t mean that the business will survive the following month.
The key to a thriving company is to ensure that you understand your receivables, payables, and the net position at all times in order for you to plan ahead.
The profit and loss, balance sheet and cash flow statement are the foundations for monitoring a business turnover and making decisions.
3. Dealing with competitors
When dealing with competitors in the same industry, you may feel like a kid looking up the magnificent Himalayas. And someone comes along to tell you that the new toy you have been wanting all this while is waiting for you at the top of the mountain.
It can be intimidating especially if you are comparing yourself to companies that have been around for ages. Seek help and advice from experts. Engage with them and be aware.
You will soon realise that you shouldn’t worry about your competitors. Focus on what you do and let the public – clients, consumers, customers, audience – decide who they would like to support.
Compliance and regulatory requirements can be a tedious factor that can make or break a business if you fail to conform or are too lax. Always know what laws are applicable to your business and strive to comply.
4. Dealing with people
As the company grows, so does the need to hire more employees. Staffing and manpower cost is always going to be an issue in any company and you will have to find the right solutions for it.
In the beginning, everything may seem rosy but along the way, disagreements and friction are bound to occur. Don’t be afraid to be honest with your team or even go separate ways with co-founders or employees.
This is the cycle of team management (Forming, Storming, Norming and Performing) according to psychologist Bruce Tuckman.
Often, a company needs a good cop and bad cop to keep things in balance when managing people. Different people have different personalities and managing everyone differently based on their personalities can be a daunting task.
Having a reward and penalty system – focusing on positive and negative reinforcement instead of punishment – helps keep things in check.
5. Know who you are
When you are a start-up, everyone has different ideas about how to run your business and how you should grow.
This is especially true when you’re in the early fundraising stage and your investors are telling you to adopt a certain business model or product.
Take time to find – at times even form – your own identity and your vision for the business, the best business model and product-market fit.
Without being firm in your identity and vision, you may get swayed by investors and partners to take on directions that may not be the best fit for the company.
The key is to give the founding team enough time to test the market and experiment different business models to identify the best path for the start-up and share that vision with investors.
6. Risk management
A big part of growing and expanding the business is in taking risks. Playing on the safe side will only take you that far but it would not prove if a business or an idea is successful or not.
However, accidents happen. People resign. Buildings get damaged. Machinery breaks down. Understand the risks associated with your business and plan for them.
Insurance helps. Employee coverage, fire and theft, medical and redundancies help overcome this.
Starting an online business and having your primary sales from social media channels can be risky too. One online business had their Facebook account hacked and lost all of their 80,000 followers they had garnered over the years.
They had to painfully start their Facebook fan page from scratch. Their advice? Collect your customer database from day one – having done this, they managed to send out e-mail newsletters to inform their customers on their new page after that incident.
Other factors such as a sluggish economy and currency are factors to bear in mind. If you’re selling a tangible product and it originates from overseas, the price may increase.
On top of that, the Goods and Services Tax (GST) comes into play causing the price to be pricier compared to locally produced products.
Coupled with the fact that Malaysians generally have less disposable income due to inflation, GST and weakening Ringgit, each customer spends less compared to previous years.
To counter this dip in sales, you could spread your investment eggs by focusing not just on the Malaysian market but also regional and international scenes.
Ensure that the foundation of what you are doing adds value to the surrounding environment.
If your business is relying on the brand of others, the product of others and the risk of others, you can be sure that that is also the direction your profit is headed in. Furthermore, your business is less in your control than you think. Choose the right business model with a long-term goal in mind.
Walk the talk. Do what you say and follow through on said promises. What you tolerate becomes company culture.
How you behave as a leader defines the kind of culture your company practices. Plan for growth within your team.
Understand that in time, people grow and learn. If you can inculcate this into your work environment, it becomes a strong retention tool while allowing yourself to expand or embrace greater roles and responsibilities.
Who better to succeed and run your business than the very staff who are working in it day-in day-out?
New company owners tend to overestimate their own capability. Learn that you do not know everything and that is okay.
Get a mentor – someone you can admit your mistakes to – and seek help from when you mess up. Your mentors will be able to hold you accountable to your business plans and personal development and pinpoint – and resolve – faults when they see it.
Another key point is that to be a leader, you must learn to be the bigger person. Give first. Trust in others. Believe that they will do their best even if you are doubtful. Supervising works better than controlling. Allow for mistakes as greater learnings can also take place when mistakes are made.
A leader brings out the best in all around him. Your health, your discipline, your day to day habits and focus are essential because you need to be at your best at all times to make the right decisions.
If you are sleepy and exhausted all the time, your business will eventually face the slump too.
Have an occasional downtime to recharge yourself even if it means turning off your phone notifications for a while.
This is a necessary spend. However, it can be very painful on your company’s expenses if it is not executed in the right way. Not many receive the right return on investment (ROI) on that spend.
Marketing needs to be data driven. At the end of the day, understand your sales funnel and fine tune it. When possible, outsource work to others even if you can do it yourself.
Delegating tasks and outsourcing will enable you to focus on more important things at hand.
Sometimes you may find that your market is not ready for innovative solutions to everyday problems. Some are just happy facing the current issues.
Keep educating your target market and never give up. Keep updating your progress until your value in business is loud and clear.