12 Common Challenges Faced by Entrepreneurs in 2024

Starting a successful business from scratch can be challenging. There are many challenges and roadblocks that the average entrepreneur has to face; the most popular is cash flow management.

Entrepreneur statistics show that 20% of small businesses fail within the first year, and 70% of businesses fail within the first ten years.

As an entrepreneur looking to find a foot in a dominated market, you need to brace yourself for the challenges ahead. What separates a successful entrepreneur from an unsuccessful one is the right entrepreneurial mindset that eliminates self-doubt and weaknesses.

Identifying the common challenges is the first step; finding proactive ways of tackling them is where success lies.

This article explores the 12 common challenges of an entrepreneur and practical ways to overcome them.

Let’s get started.

1. Product or Service Selection

One of the biggest issues entrepreneurs struggle with is deciding which product or service to sell to their target market.

Deciding what to sell is important in setting up a business. Your product or service distinguishes you in the market from other competitors. Falling short in this area ultimately leads to the failure of your business, irrespective of your prior knowledge and expertise as a business person.

Choosing the product or service you aim to sell makes it easy for you to identify your target audience and competitors, giving you a competitive advantage.

Every entrepreneur needs to conduct market research for proper product or service selection. You can hire the services of a marketing firm or freelance researcher for this purpose.

Market research is necessary for setting up a business model that allows you to identify your target audience’s needs and the resources available to address them.

For example, market research can identify the lapses in a community regarding access to specific products or services. Your ability to identify and fill this gap and saturate the market with this needed product or service distinguishes you from other entrepreneurs.

2. Raising Capital

Sourcing for capital to start a business is one of the biggest challenges you face as an entrepreneur. Even if you have prior experience of how to run a business, capital is one issue that is likely to give you sleepless nights.

Capital is the working plan of a business, serving as the means to bring your ideas into firm reality. While capital can come in different forms, funds are the biggest determining factor that guarantees whether or not the business will kick start.

Startup statistics show that the biggest reason for startup failure is not receiving enough venture capital funding.

As an entrepreneur, you need to find proactive ways to source funds, as you most likely cannot fund the business yourself. Seeking donations from friends, families, or groups is one of the immediate ways of getting funding for your own business.

You can check out financial institutions that offer business loans for startups with a minimum interest rate. Depending on how big the business is, seeking out loans is the quickest option to get access to a large sum of money.

3. Sales Strategy

Sales is an important criterion for every business, serving as the mechanism by which a business achieves its set target. The number one business objective is to make a profit. As an entrepreneur, sales is one aspect that requires innovative strategies to achieve.

Before you dive into a new market, conducting the necessary research is important as it allows you to ascertain your target market.

Paving the way for yourself as an entrepreneur is a common challenge that you will face, especially in a saturated market. Ultimately, your ability to carve a niche for your business largely depends on how effective your sales strategy is to consumers.

Your sales strategy makes a big difference, helping you establish your business in the face of stern competition.

4. Marketing Strategy

A key deciding factor for every aspiring entrepreneur is how familiar your goods or services are in your target market. Irrespective of how cheap or efficient your goods or services are, there is no gain if it is not getting to your target audience.

Marketing usually comes in different forms, as it introduces your brand and the goods and services offered to the market. Whether through word of mouth or well-structured campaigns, your marketing efforts help you to put your brand out there.

Many entrepreneurs find marketing overwhelming as it requires investment to be able to pull a larger coverage in the market. The bulk of your expenses as an entrepreneur largely go to your marketing efforts.

The biggest issue with marketing efforts is the rewards are not immediate, as you tend to reap the benefits later. To ease your concern, you can start with light marketing strategies and increase the momentum as your business gains ground in the market.

Some of the most effective marketing strategies for fast business growth include content marketing, social media, SEO, influencer marketing, email marketing, and affiliate marketing.

5. Hiring Staff

Hiring skilled workers is one area that proves challenging even for big organizations. As an entrepreneur running a small business, the workload can be overwhelming, and you need capable hands to assist you in running the business.

The challenge is finding these capable hands with the constraints you have on resources. Ensure the aim of hiring employees is not defeated, as quality always beats numbers.

You need to have a concrete recruitment plan reflecting the needs of your business. Your focus should not just be on hiring names but on getting quality hands from the hiring process.

As an entrepreneur, you need to devote an ample amount of time to finding capable hands, which helps ease your workload.

6. Managing Employees

Employees are the human capital aspect of a business, forming the crucial workforce needed to bring a business to achieve its set goals. While the onus is on you to start small as an entrepreneur due to financial constraints, employees are how you expand your business.

Finding capable hands is a challenge entrepreneurs face, as access and availability are known restrictions you need to work your way around.

Even after hiring capable hands, having the right people management skills ensures your employees are properly motivated to deliver on your business goals.

Managing a group of people is a challenging task, as they all come from different backgrounds and have different ways of getting things done. Set rules to guide everyone's conduct, ensuring the interest of the business always comes first above personal interest.

7. Delegating Tasks and Authority

Entrepreneurship puts you as a business owner at the helm of affairs of the day-to-day running of the business activities.

Unless you have an advisory board or management team that provides you with constant advice, most of the tough decisions of the company rest on your shoulders.

One of the common challenges many entrepreneurs face during their entrepreneurship journey is how to delegate tasks. While a company’s success relies on teamwork, the team works effectively when each member of the team functions in their optimum capacity.

As a business owner, you need to properly define your existing processes and highlight areas where you need rapid improvement.

While a business is not guaranteed overnight success, properly delegating tasks and authority in your business serves as the oil that keeps the business engine running.

8. Time Management

Just like money, time is another luxury that will always be limited to you as a business owner. Unlike money, which is not readily available, time is readily available but becomes a luxury when not properly used.

The best way to properly utilize time is by having a concrete plan that delegates tasks to different members of the company. Working as a team is the most efficient shortcut to conquering time, allowing everyone to play a part in the business's success.

Another time management tip is to divide the business goals and objectives into smaller tasks. After this, you then run these tasks on their level of importance to the entire business goal and objective.

Your job as an entrepreneur is to ensure these tasks are carried out based on their level of importance. With these tasks prioritized, you can now manage time better by allocating more time to critical tasks and less on easy-to-complete ones.

9. Managing Cash Flow

Cash flow management is one area that poses a huge challenge to business owners as it questions the entire business process. Your business cash flow simply points out how much money the business has made over time when compared with expenditure and other costs.

The goal of every business is to make a profit and your cash flow highlights how well your business has come to achieving that goal. Having a proper cash flow management strategy helps inform you about how well your business has performed over some time.

Revenue is the key metric tracked in every business and the ultimate goal is to ensure your revenue generated outnumbers your expenses. The difference between your revenue earned and the expenses incurred determines whether your business makes a profit or loss.

Cash flow is the fuel that drives the business's day-to-day running activities and needs to be properly tracked at all times. If you do not have prior accounting knowledge as an entrepreneur, there are accounting software tools that effectively help you track your cash flow.

You can consider hiring an accounting firm to give you a professional look at your business if you have the means to afford it.

10. Expanding the Business

Growth is never an easy step, and even for us as humans, it requires us to undergo modifications that most people find challenging.

As an entrepreneur, having a growth mindset is important, as it positions you and your business to achieve bigger and greater things.

Expansion is always a difficult bridge to cross for new business owners because it requires them to make changes to their existing business processes and structure. The best way to face the issue of expansion is head-on.

Conduct a thorough analysis of the areas that are favorable to you and your business and carry out test surveys. With this, you are better informed and equipped to look beyond your normal scope of operation and attract new customers.

Expanding your business requires a new level of confidence, as you have to adapt to a new market. There would be changes to your prior business structure, goals, and objectives to accommodate these new changes.

Your focus remains to meet your intended goals and objectives, and your expansion process needs to be conducted in a way that guarantees these.

11. Maintaining a Budget

Another area that poses a challenge for entrepreneurs is how to form a budget to serve as a guide for their business operations. Unless you have prior managerial experience, coming up with a budget is a daunting task, especially with the constraints of resources.

A budget is a key aspect of every business operation, serving as a guide on how money and other resources are to be shared and spent.

Keeping track of your revenue and expenses is important as a business owner to ensure you have enough working capital for your business operations.

Drawing up a budget is one aspect of the process, but sticking to the budget is another area that often proves challenging. In the day-to-day running of your business, some areas need immediate attention, and it is always tempting to throw money at problems.

With a solid budgetary plan, you are accountable for all the income you receive, with specific instructions on how to spend it.

For challenges you did not plan for, you should include a miscellaneous expenditure to account for these unforeseen challenges. This way, you take a more structured approach to running your business.

12. Managing Competition

Competition is one of the characteristics that makes us human, as it is our nature to compete with ourselves in a constrained market. Realizing that there would be competitors in your entrepreneurial journey gives you a competitive advantage early on.

There is a huge likelihood that there is already a market for the business idea or setup you intend to venture into. After already conducting your market research and doing your due diligence, you have an idea of who the major players in the industry are.

But with a business, innovation is a major distinguishing factor that makes you stand out. Innovation is one of the biggest solutions to competition, as the market responds to you based on what you can offer.

Realizing your competitors early gives you a major advantage, as you get to form strategies early on how to capture the market. The fight among competitors is for market share. As an entrepreneur, your strategies are what guarantee you a fair fight amidst stiff competition.

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