Challenges Faced by Entrepreneurs in Starting a New Business

The assignment provided details the challenges encountered by entrepreneurs in establishing a new business, including sourcing funds and deciding on a location. It emphasized the significance of planning employee training programs to enhance employee contribution to the startup's growth. Furthermore, it highlighted the role of time management and the adoption of social media strategies in ensuring the success of a new business venture.

Entrepreneurship

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body.......................................................................................................................................1
Challenges involved in the process of starting a new business venture. ...................................1
What actions can an entrepreneur undertake to maximise the likelihood of success in the start-
up process....................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
An entrepreneur is a person who comes with an idea to start a new venture and takes all
the necessary steps for its formation. There are many issues or challenges involved in the
procedure of establishing a new enterprise or business such as raising of funds, taking decisions
or gathering resources. These challenges will be examined in this report along with the actions
an entrepreneur can take to maximise the likelihood of success in the start-up process. It is very
important to identify and manage various issues faced by a business man in order to achieve
organisational goals and objectives. Different effective strategies to overcome the challenges are
discussed in this assignment.
Main Body
Challenges involved in the process of starting a new business venture.
Entrepreneurship is a process of starting a new business along with taking risk with a
view to earn growth and profits in the future. There are many challenges which are faced by an
entrepreneur while starting a business, some of them are briefly described below:
Capital: Business can never start without capital. Raising of finance is the biggest challenge that
is faced by an entrepreneur (Parker, 2018). Every business man needs capital to run venture,
Some people already have large amount of money from the last business they have sold or may
be from any other sources. Whereas, many people don't have enough money to start a new
establishment so they need to raise funds thus it affects in opening a new venture. There are
many ways to get funding like from bank loans to family and friends. Cost of capital is to be
beard by business man for raising capital from any source. Best source should be decided after
considering all the aspects and funds must be raised from the same point. If an entrepreneur
plans to have an investor then the biggest challenge is to make them understand about the
business and trust is required to develop among those investors. In order to open or establish a
new business venture it is very essential to have enough financial resources or funds. Lack of
funds or capital can negatively influence the development of a new venture. Capital is needed for
getting a new place, hiring staff and performing business operations which is not possible is there
is no sufficient capital available with the organisation (Lounsbury and Glynn, 2018) There are
many financial institutions from where money can be raised and business can be expanded.
Right business location: Location affects the business and its growth to a great extent. Business
man should find such location where it is easy for customers to reach. In case of a small
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company, Premises should be at such place that it becomes convenient for employees and every
other staff members to reach. But to find a good location is not easy, it involves high rent or high
buying prices for premium location. So it is a big challenge that is faced by an entrepreneur to
decide location of venture (Lipset, 2018). Many other aspects such as transportation facilities,
availability of raw material in case of manufacturing unit etc. should be considered. Every factor
is to be taken seriously so that it will be easy for entrepreneur to run the new business venture.
Human resource: Manpower is the biggest resource that an organisation can possess. After
raising funds next big challenge is searching and recruiting skilled people for the business entity.
Selecting right employee or candidate is a big challenge for every business man. Reviewing
resumes, taking interviews and going through the entire procedure takes lots of time and it is a
challenging task for businessman to find out the right candidate. Selecting the right person after
considering all those factors which are required to perform the particular job role in the
company. Training program should be designed by entrepreneur so that they can give training to
new joinee for the work they have to perform in the organisation (Höglund, Holmgren Caicedo
and Mårtensson, 2018)Brilliant team of employees can take the establishment to another level.
Human resources can use their brains and share new ideas, innovations to the new venture. They
also help in growth of company by working in the right direction which has been provided to
them. An entire team is required to be hired for different type of work. For handling work related
to finance accountant is required to be employed. Likewise, person for every field that is
necessary to make organisation run should be hired. Due to insufficient manpower a new venture
can get negatively affected as every new business needs to have sufficient human resources
which can perform various functions. These functions includes marketing, accounting,
management and operations, a strong workforce is essential to perform these functions so that
business goals can be achieved effectively.
Decision making: It is one of the challenge that is faced by an entrepreneur who is
establishing a new business venture. Every single decision related to establishment affects the
entire organisation. Decision maker is not only responsible for success and failures of
establishment. Various other factors like changes in competitor's strategy and sudden changes in
tax and laws of Country also affects the new business enterprise. While starting a new business
every decision is a challenge for the entrepreneur (Schwens and et.al., 2018). One needs to be
very attentive and consider all the factor and its impact before making any decision. Decisions
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are to be made in such a way it gives maximum possible benefits to the organisation. For
example – Implementation of a new technology in the business needs to be planned considering
the cost, significance and outcomes. The negative and positive sides of that particular technology
needs to be identified before implementing it.
Dealing with competition: After starting a business, next challenge that has to be faced
by an entrepreneur is to deal with its competitors. It is really important to give a tough
competition to survive in this competitive world. It is always the biggest challenge for a person
to launch products with such quality and price that customer can prefer it over other products. It
sets a benchmark for creativity and helps the establishment to come with better innovative ideas.
It improves quality of products and services that helps in dealing with the challenger. It is such a
challenge which can be met by making proper planning and its execution to deal with the
competitive market. Competition can result in a business lose its relevance in the mind of its
customers so one must always be on guard and on top of their field. The company can face a
great challenge in the process of stating a new venture as it develops a risk of failure for the
organisation. There are a lot of competitors in the market providing same services and products.
Therefore, it is essential for the company to ensure it has unique product or service that can
attract customers.
Time management: While in starting time of a business venture, it is very difficult for
an entrepreneur to manage all the activities and time together. Priorities are required to be set
while managing time and set activities that are to be done during the whole day. Implementing
the desired schedule is very difficult challenge. But to be a successful entrepreneur one should be
good at managing every task and all work should be done on proper time (Stuetzer and et.al.,
2018). Everyone make their schedule according to the time and work they to do. So Entrepreneur
should neglect those areas which are not so important. Time should be managed in such a way
that no task will be left for tomorrow. Goals should be set first and every thing should be
managed accordingly. If any task does not match with the goals that are set than it should be
eliminated or should not be set on priority. Improper management of time can lead to reduced
efficiency and delayed implementation of a new plan or venture. In order to design, develop and
establish a new venture each and every activity should be arranged according to a specific
deadline so that development of a new venture can be done effectively and efficiently.
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Managing cash: Many successful ventures get bankrupt. A business dies when it runs
out of money. It is really important to have cash to run a business. It is the most difficult task an
entrepreneur has to deal with. Cash is something that is really important to run business. One
should always focus on increasing cash to run a successful enterprise. Cost should be minimised
by optimum utilisation of resources or by reducing fixed cost such as rent can be renegotiated or
premises can be shifted to another place where rent is low (Bruton, Zahra, and Cai, 2018). Cash
should be managed such that it will not bring obstacles in running the business.
Dealing with different people: Every businessman has to deal with many people while
starting a new venture. As the person is new and starting the business it is very difficult to deal
with new people. Many people like supplier of raw material, customers etc. are needed to talk
and entrepreneur has to deal with them. One should be good at communication to influence other
which will result in cracking the deal in favour. It is the toughest task to conveyance other for
buying products which the start up is manufacturing. So these are major challenges that are faced
by the businessman while starting a new venture.
Actions that an entrepreneur undertake to maximise the likelihood of success in the start-up
process?
To maximize the probability and growth in a business, Many actions are required to be taken by
entrepreneur. Some of them are discussed below in brief.
Stick to business plan: While starting a new business many thought comes in to mind of
the entrepreneur. They underestimate their plan and power of new venture. But to be successful
business person one should stick to the business plan and be passionate about it. To run it in long
term a person should be sure enough about the prepared plan. If an individual takes back step
after preparing a plan than it is impossible to take it to next level. So, to maximize the probability
of success owners should stick to the plan which is prepared by them.
Be creative and innovative: While planning a start up, one should think in different way
and should come up with an innovative idea. It will maximize the chances of success and growth
of a business. Being different from others helps in competing with the similar brands. New
products which are creative and innovative always attracts consumers (Momsen, 2018). This will
increase the chances of success for a venture. So every entrepreneur should focus on being
different from others. Creativity will enhance the growth and profits of start ups.
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Maintaining good relationship with the employees : An entrepreneur or businessman
should treat every employee equally and fairly. Workers should be paid on time and be valued by
their seniors and subordinates. This will give job satisfaction to employees and aid effective
establishment of business of venture. Thus, they will contribute more to the organization by way
of working hard and it will maximize growth and success of establishment. So every
entrepreneur should be generous with employees for their own and employees benefit as well.
An effective or healthy relationship with employees can motivate them to improve their
performance and support a firm in a best way possible.
Define target market: To grow a venture, entrepreneur should determine target market
that which geographical area they should cover. It will help in knowing that what strategies
businessman should plan to increase sales in target market. Strategies can be formed as per the
needs and wants of consumer of the target market. This will result in success of business and it
will take the enterprise to higher level.
Ask for feedback: Many ventures does not ask for feedback because they are afraid of
negative comments. But in business it is necessary to take feedbacks from customers so that
enterprise can be improved more. In case of a start up, it is more important to take reviews
because it allows knowing the expectations of consumer by take the view of consumer regarding
the viability of idea
It will also provide direction to owner that in which direction they should continue their business.
Taking feedback from consumers show that management is interested in knowing about view of
customers. This will result in maximising the likelihood of success in the start-up process.
Learn form competitor: An enterpriser should always learn from their competitors. It is
very difficult to determine prices of products, so owner can learn from the pricing policies of
competitor to attaining success in process of starting new business. It is really important to give
a tough competition to survive in this competitive world. It is always the biggest challenge for a
person to launch products with such quality and price that customer can prefer it over other
products (Hornsby, Messersmith and Rutherford, 2018). Marketing strategies can also be
analysed that what other companies are following. Learning from the competitors will help in
becoming better and thus, it will help in growing more and it will also result in giving tough
competition to other already existing establishments.
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Focus on customer satisfaction: Every establishment should ensure quality products and
services to their customers. In order to earn growth, venture should make such policies that
satisfies needs and wants of consumers which will help in attaining success in process of starting
new establishment. Products should always be made after making a complete survey on taste and
preference of consumer. It will increase sales of start-ups and result in attaining targeted markets.
So, focusing on customer satisfaction is the major way to attain success in a business. It is
important for an organisation to focus on increasing customer satisfaction by providing best
products and services as it can help to attract more customers by developing competitive
advantage in the market. Customers are highly responsible for success and failure of each and
every business.
Training of employees: Every company hire employees to accomplish work in timely
manner so that attaining success in process of starting new venture. Organisation work depends
on the type of venture and its nature. Worker needs to be trained as per the organisational
culture. Training program should be planned as per the demand of work and analysing the time
required to learn the work of establishment. Every company should provide effective training so
that trained employees can contribute more effectively and efficiently. This will help the
company will maximise its growth due to higher employee contribution and attaining success in
process of starting new venture. Business venture can always grow more if they have skilled and
trained staff who works hard and always give innovative ideas in the company. Highly effective
employees can help in improving the overall performance of every business, training can help
them to develop their skills and abilities to perform any business activity. Skilled employees can
increase business productivity leading towards high product and success.
Adopt social media: Even after knowing the power of social media, many people has not
adopted it in their business ventures. Social media plays a significant role in reaching large
amount of audience. While starting a business, entrepreneur should think the ways that how they
can reach the customers. Advertising through social media is a great way to introduce new
products and services. Everyone is connected through each other on social sites. It makes easy to
reach target market (Acs, Estrin and Szerb, 2018). If a businessman does not use it then their
competitor will. In very less time a start up can reach many people at once and let them know
about the new venture and their products and services. It will make the establishment popular
and helps it in growing and this will result in maximising profits of the start-ups.
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Managing time efficiently: It is really important to manage time properly in order to
achieve success in a business. Everything is required to be set and managed according to the
activities that are required to be carried while running a venture. Entrepreneur should ignore
those regions which are not so essential. Goals should be determined first and every thing should
be managed accordingly Utilizing the wanted schedule is very difficult challenge. But to be a
successful businessperson one should be great at carrying every task and all activities should be
done on proper time. Everyone make their schedule according to the time and work they to do.
Time should be managed in such a way that no task will be left for tomorrow.
CONCLUSION
From the above report it has been concluded that, every entrepreneur faces lots of
challenges while starting a new business venture. Source of Raising funds and deciding the
location of enterprise is the major decision that should be decided by entrepreneur. In addition to
this, it has been determined that Establishment should plan training program for employees so
that they can contribute more to the new start up and its growth. Furthermore, there are many
factors or elements such as training of employees, managing time, adopting social media that
helps in successful establishment of a new business venture as discussed in the above report.
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REFERENCES
Books and journals
Acs, Z.J. And et.al., 2018. Entrepreneurship, institutional economics, and economic growth: an
ecosystem perspective. Small Business Economics, pp.1-14.
Bruton, G.D., Zahra, S.A. and Cai, L., 2018. Examining entrepreneurship through indigenous
lenses.
Höglund, L., and et.al., 2018. A balance of strategic management and entrepreneurship practices
—The renewal journey of the Swedish Public Employment Service. Financial
Accountability & Management.
Hornsby, J.S. and et.al.,, 2018. Entrepreneurship everywhere: Across campus, across
communities, and across Borders. Journal of Small Business Management, 56(1), pp.4-10.
Lipset, S.M., 2018. Values, education, and entrepreneurship. In Promise Of Development (pp.
39-75). Routledge.
Lounsbury, M. and Glynn, M.A., 2018. Cultural entrepreneurship: A New Agenda for the study
of entrepreneurial processes and possibilities.
Momsen, J.H., 2018. Gender at the border: Entrepreneurship in rural post-socialist Hungary.
Routledge.
Naranjo-Valencia, J.C. and et.al., 2018. Entrepreneurship and Innovation: Evidence in
Colombian SMEs. In Handbook of Research on Intrapreneurship and Organizational
Sustainability in SMEs (pp. 294-316). IGI Global.
Parker, S.C., 2018. The economics of entrepreneurship. Cambridge University Press.
Schwens, C. and et.al., 2018. International Entrepreneurship: A Meta–Analysis on the
Internationalization and Performance Relationship. Entrepreneurship Theory and
Practice. 42(5), pp.734-768.
Stuetzer, M. and et.al., 2018. Entrepreneurship culture, knowledge spillovers and the growth of
regions. Regional Studies, 52(5), pp.608-618.
Online:
Ways to make business successful, 2017. [Online]. Accessed through:
<https://www.entrepreneur.com/article/223390>.
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