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Make It Your Business to Know Start Up Challenges

Adam Groff

September 10, 2013

Regardless of the economic climate, starting a new small business is a life-devoting amount of work.

Sure, being a business owner is rewarding and has plenty of advantages, but entrepreneurs that aren’t ready for those first few years of startup difficulty won’t be able to call themselves business owners for long.

With the idea that anything worthwhile is a struggle, here are just a few challenges facing startup businesses looking for a solid start:

Hard-to-Find Funding

It’s no coincidence that one of the main challenges with opening a new business is finding the funding to start it up in the first place. Because the economy is still on a bit of a rollercoaster ride, banks and other lenders are reluctant to give startups a chance.

New business loans that were once as common as mortgage loans have become that much harder to acquire. In fact, it’s not uncommon for lenders to require new businesses do some of their own legwork and come to the table with a large percentage of the funding already in hand.

Markets Without a Market

Thanks to the Internet, anybody with an idea can turn the “next big thing” into a business. The only problem with that is, not everyone knows how to perform market research and misunderstanding the market ultimately leads to startup failure.

The bottom line when it comes to startup success is knowing whether or not there’s a market to support the business.

If no one wants or needs a startup’s products or services, the startup will quickly shut down. Researching and making sure the “next big thing” is really as big as it seems is worth its weight in startup gold.

Cash Flow Fallout

The difference between cash flow and funding is this: funding helps a startup get off the ground and cash flow is what keeps it running on a day-to-day basis, so don’t confuse the two. After all, any successful business owner knows that profit comes in waves.

It’s crucial that startups take into account the payment gaps between invoicing schedules, employee wages, and slow weeks. If a new business doesn’t spread its cash flow evenly, a momentary dry spell in profit could result in a complete collapse.

Insurmountable Insurance Costs

What many startups fail to take into consideration is the extreme costs involved with insuring a new business. Everything from personal and operational insurance to employee insurance will put a startup through the financial wringer.

Because of this, it’s wise for startups to start budgeting for insurance costs from day one. Business models that better reflect insurance costs will give entrepreneurs a much more realistic understanding of what it takes to stay afloat.

The Exhaustion Factor

Last, but certainly not least, is the exhaustion factor that goes along with starting a new small business.

The first year or two is the most mentally and physically demanding time for startup business owners. Entrepreneurs must be prepared to give up their personal lives and free time in order to see their business dreams come to life.

Again, starting a new small business has its challenges and weighing the bad with the good is all part of the startup battle for success.

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