Entrepreneurs face a lot of challenges throughout their journey. Some have great ideas but never execute them, some invest in something they don’t fully understand and therefore fail while others just don’t plan well enough.
On today’s blog, I am going to share 4 great challenges faced by entrepreneurs and how you can overcome these challenges if you’d like to be an entrepreneur.
Fear is one of the greatest enemies that an entrepreneur could ever face. “Should I really start this business?” “What if I fail?” “Will I be a laughing stock?” “Am I even good enough to run a business?”
If you’ve experienced this before, there are really two things that you can do to overcome your fears. The first thing is a shift in mindset. As I was doing the research for this blog, I came across a quote that really had me shook! “Doubt kills more dreams than failure ever will.” With this in mind, I can only imagine the number of great business ideas that died in the minds of the founders. Heck! I wonder if the business ideas that I abandoned would have made me ‘great’ if I actually pursued them (okay I am deviating. Let’s get back to the topic).
The second thing that you need to do is to prepare more. Preparation is key to building confidence. Remember all those times your teacher or your manager practically begged you to prepare more so you can ace your presentation? The same applies when starting a business. You’ll need to do more research, talk to as many people as you can who are in that industry, and even spend hours on the internet learning as much as you can about your business/industry. Preparing for this nitty-gritty will erase the doubt in your mind and before you know it, you’ll be raring to go out there and kick ass!
I can give you an endless list of people who started a business, did it for a few months, and just decided to give up. Well, of course, some of these were due to unavoidable circumstances such as lack of cash flow (we’ll talk about this in a few) but some of these entrepreneurs decided to close their businesses due to a lack of commitment.
Now, this begs the question, how do you stay committed to your business?
There are a number of factors that drive this obviously, but it all trickles down to passion. How passionate are you about the solution that you are offering? Let’s take our CEO for example, Val Njoroge. Val started Africa’s Pocket because she was passionate about shifting personal finance mindsets among the masses, so people can begin to build the lives that they want. This has been a big driving force for her and despite some of the hurdles that she’s obviously faced so far, she’s been passionate enough to not only keep going but to come up with brilliant ideas to fast track her to achieve her goals.
You’ve overcome fear, you’ve finally started a business that you are very committed to but you now need to overcome yet another great challenge; failure. Fun fact (or maybe not so fun), 90% of businesses fail in their first year. This means that if you decide to be an entrepreneur you are already fighting some very tough odds.
As we mentioned before, you need to be passionate about your business but what we haven’t mentioned yet, which is just as important as passion, is your business’ ability to generate income. See, before you can venture into something, you need to do some calculations to ensure that the business you are about to get into is profitable (it sounds complicated but we simplify this for you on our flagship course, Your roadmap to wealth). Once you’ve done these calculations you’ll be able to identify if your business idea is able to generate the expected income for you.
Apart from generating income, you’ll also need to get a grasp of the non-market forces so you can increase your chances of success. Non-market forces are basically the things that don’t have to do with price, supply, or demand but they could make or break your business. Do you have the right networks? The right opportunities? The right team to execute your vision to success? Do you have a well-experienced board? Having a grasp of these non-market forces will drastically increase your chances of success.
As you might have gathered by now, entrepreneurship is not easy. After overcoming all those challenges that we’ve mentioned before, it’s time to overcome another challenge that most entrepreneurs overlook; cashflows — is your business able to pay suppliers, pay salaries, tax, and all the other expenses? According to research, if you decide to become an entrepreneur, you’d need to make at least 120% more than your current salary, to maintain your current lifestyle. Once you start a business you need to cover all the costs associated with making that money. If your business deals with production/manufacturing, 30–40% of your sales should be spent on raw materials. About 20% should be used to cover salaries, marketing, and distribution. You’ll also need to cover tax, which is about 30%, and still have some money left to reinvest in the business.
Let’s assume that you currently earn KES 50,000 at work. This is what your business numbers need to look like if you’d need to make the same KES 50,000 profit at the end of the month.
Keep in mind that if you have other shareholders, you would pay out dividends and that might reduce your share. Now, it’s not all bad news, with the right team and strategy, it’s possible to grow the revenue number significantly.
So there you have it.
Entrepreneurship is not easy, however, with the insights we have shared today, you have a better chance of being successful.
If you want to take it a step further so you are fully equipped to create a successful business, check out our course, Your roadmap to wealth. In the course, we discuss very handy topics such as; navigating the real difference between entrepreneurship and employment to figure out which is the best option for you, grow your active and passive income to achieve financial freedom and, evaluating different businesses and investing opportunities to avoid losing your capital. Click here to learn more about the course.