The challenges entrepreneurs face can vary widely. It depends on what business they are going to run and how much resources they have. Identifying and coming up with a viable business idea is an entrepreneur’s first challenge. Other challenges could be related to how they choose the right location, raise capital, manage operations and business finances.
In general, challenges also vary over the life span of a business. The challenges faced when starting a business can be different when growing a business. And, this article will focus on the challenges entrepreneurs face when starting a new small business.
Identify viable business opportunities
Screening and selecting viable business ideas is an important part before starting a business. It can determine future success.
Entrepreneurs often find various business ideas from their daily problems. There may be many available. However, not all of them are worth running.
For example, entrepreneurs find business ideas from their hobbies, skills or personal experiences. Another source is from previous work experience. Small-budget research and attending franchise fairs can also be potential sources for business ideas. In fact, some entrepreneurs may come across the idea by chance.
Although there are many business ideas and market opportunities, not all …
Solutions to avoid business failure can vary widely. There are countless businesses around us with different backgrounds, including different target markets and resources. For this reason, the types of risks and solutions to deal with them can also vary widely.
To be sure, no entrepreneur starts a business to fail. They try their best to start, operate and grow the business. Sometimes they are successful. But, at other times, they failed. And failure does not discourage them from starting another business.
Business failures don’t just occur due to internal factors, such as poor management and cash flow problems. But, it was also due to external factors. For example, more established companies pursue aggressive strategies, which ultimately kill smaller businesses with limited resources.
Likewise, when the recession hits, many businesses go bankrupt. That’s not just the case for small and young businesses, but also for large, established companies.
How can we mitigate failure? First, we identify the source of the risk, what are the possible causes of failure. Second, we sort them from the most strategic to the least strategic, which ones have a significant impact and are most likely to occur. Third, we prepare anticipatory steps before the problem actually …
Business ideas emerge from everyday life. For example, they commercialize their hobby. Or, they observe the problems people face and then offer products to provide them with solutions.
Basically, business ideas are plentiful and it’s not hard to find them. However, not all of them deserve to be commercialized. So, the real difficulty when starting a business is finding a viable business idea.
How to judge an idea is feasible or not? Beginning entrepreneurs may have to spend some time trying to find answers.
On the other hand, mature entrepreneurs can be one step ahead of ordinary people or beginners. They have a kind of sense when it comes to a business idea. They can quickly determine whether the business idea is feasible or not.
How do business ideas arise?
There are many entrepreneurs around us. So, there are many ways to capture brilliant business ideas. The question is, where do entrepreneurs’ business ideas come from? How did they find it?
In general, entrepreneurs’ business ideas come from their daily lives. It could be intentional or coincidental.
Then, how entrepreneurs offer solutions, there are two types of entrepreneurs. Some entrepreneurs come up with ideas and offer completely new solutions. Others …
Building a competitive strategy is about how companies outperform their competitors in generating profits by satisfying the same consumer needs and wants.
There are many businesses around us. Some target the same market. They compete directly in satisfying consumer needs and wants. And, their products replace each other. So, when consumers do not like the product of a company, they will switch to a competitor’s product.
Now, let’s say, you are running a business.
Being successful in the market requires an effective competitive strategy to win the competition. When successful, your company generates above-average profitability by gaining a competitive advantage.
However, due to dynamic competition and market demand, competitive advantage may last only temporary. Competitors may develop superior competitive strategies and eventually outperform your company.
For this reason, your company should adapt the strategy. Thus, it remains relevant and effective in dealing with the changing business environment. And, if your company is able to maintain a superior position over time, that is what we call sustainable competitive advantage.
How does your business successfully compete and gain a competitive advantage? Michael Porter provides a basic framework, known as generic strategy. It tells us how companies compete, in what dimensions.
Then, your …
The way a business works is basically adding value. They do this by processing inputs into higher-value outputs. Assume, the business produces goods and you are the owner.
Starting a business
At first, you decide what to produce. You then organize and make decisions about resources, including how to pool and organize them. Some you may have to buy such as raw materials. Others you may be able to rent such as machinery and buildings. To do it all, you need capital.
Your initial capital may come from your personal pocket or contributions from your family or friends. Or, you apply for a loan or raise funds from other external sources such as crowdfunding. For external sources, you should create a business plan as a way to convince fund providers to be willing to put their money into your business.
You also design how the business operates. For example, you have to determine what business structure you run, whether it is a sole proprietorship, partnership or limited company. You also organize operational activities into various business functions such as human resources, operations, marketing and finance.
Operating a business
Once operational, your business converts inputs into outputs. We call this transformation …
Successful entrepreneurship often exhibits certain characteristics. They are attributes, features, traits in entrepreneurs and shape their attitudes and actions in realizing innovative ideas, managing operations and growing the business.
These characteristics are a success factor when starting a business. Business success does not only depend on how much capital we have, but our quality to run and build it. Some characters may have stood out in us and others we may need to hone through experience.
What are the list of characteristics of entrepreneurship? Let’s dig one by one.
Innovation requires creativity, curiosity, open-mindedness and not complacency. Entrepreneurs often have an out of the box approach to problem solving, thanks to their experience and passion for continuous learning.
Problems often arise because our resources are limited. But, that doesn’t stop us. It actually motivates us to look for ways to get the best out of the resources we have.
We should see problems as business opportunities by offering solutions. We are able to identify gaps in consumer demands or needs, which existing products have not met. We consistently innovate to generate new ideas and improve what already exists. And innovation makes us better prepared for changes in demand and …
Asset-led marketing has both advantages and disadvantages. Although more focus on internal strengths to satisfy consumer needs and wants is relatively inexpensive, core competencies are not always relevant to market demands. Dynamic market environment. Tastes and consumers can change from time to time. Likewise, competition is also dynamic. Such factors can make the competitive advantage built through past core competencies no longer sustainable.
Before discussing the advantages and disadvantages of asset-led marketing, let’s briefly review what it is?
What is asset-led marketing
Asset-led marketing is a marketing approach in which your company focuses on internal strengths to meet customer needs. Internal strength comes from the resources and capabilities your company has. Both form core competencies if they are valuable for creating value, rare, expensive to imitate and non-substitutable.
Then, your company utilizes these core competencies to produce products. For example, your company leverages a strong reputation and brand image to develop and market new products around existing products.
This approach does not completely ignore consumer tastes or preferences. But, your company is more based on internal strength to produce innovative products. Your company bases its strategy on existing strengths and assets instead of spending big bucks to properly identify consumer …
Talk of banking without the social network (social media) and you have an ordinary administrative building, bound to its four walls.
Speaking of social media, we aren’t just talking about platforms where people spend time chatting with friends or loved ones but a platform where information can be easily communicated.
Social networks have given the commercial world a handle to lay hold on in maximizing their input for a better result. You can imagine the huge amount of customers banks realize every year owing to the power of social media.
Collected Reviews will help you understand better, show the social media has affected the banking world. Reviews about banks will as well give you insight into the privileges other customers are enjoying to help you make the right choice of bank to work with.
Let’s have a quick rundown on the positive influence of social networks on bank advancement;
- Bigger audience
- Better platform for gathering reviews
- Fast and reliable
Bigger Audience, More Customers
We have over 7 billion people on the earth right now with about 40% of the entire population having access to at least, one social media platform. We’ll, you can imagine the figures in your head …
Making more profit and money is the main benefit of creating value for customers. Businesses make a profit by satisfying customer needs and wants through their products by adding value. They process inputs into higher value outputs.
What is value creation to customers?
Creating value means the business adds value to the inputs used. How much value is added? It is equal to the difference between the selling price of the product and the input costs.
Is the company successful in creating value? We can see it from whether customers are willing to pay a higher price than the input costs used to make goods or provide services.
And, creating value is the reason why business exists. Without it, they will not be able to survive because they bear the loss. Consumers do not want to buy if the product has no value to satisfy their needs and wants.
Take the tire manufacturer as an example. They buy raw materials such as rubber latex to be converted into final goods. To do so, they need locations for factories, machines to process inputs and labor to operate machines and factories. Then, after the tires are finished, they sell them to consumers. …
For management, knowing which core and support business functions are important to prioritize decision making and resource allocation. For stakeholders, such as stock investors, it also helps sharpen their insight in analyzing company performance.
Small companies might divide their business functions into four departments: operations, marketing, human resources, and finance; where operations are core business functions.
In some companies, their organizational structure may be more complex and consists not only of these four departments, but is further broken down into several. Indeed, operations remain their core function, but they may categorize some departments into core functions because they are strategic, even if they do not generate revenue.
Examples of core business functions
A core business function refers to a company’s revenue-generating activities. It usually refers to an operating function, related to producing goods or providing services. It is the main activity of the company.
In some other companies, core functions may also include secondary, but strategic activities in support of core functions. For example, a company with a highly customized product might consider production and customer service functions as core functions. Finance, human resources and marketing functions can also be considered as core business functions because without them the company …