Entrepreneurial Challenges and How to Confront Them 15 Tough Personal Normal Experiences for All Founders
Entrepreneurial challenges are not just for you alone. Almost every founder has some, if not all of these 15 challenges, each of which has to be confronted and overcome.
- Loneliness: It can be frighteningly lonely to plan a startup. The loneliness often turns into fear and doubt. So seek allies. Or at least seek out people who will boost your ego, maybe not in terms of the sense of the business idea, but in terms of who you are. Best, find co-founders. As Paul Graham says, “Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.” Best of all you need someone to pull you back from being pig-headed! I know you agenda is packed, but go to Meet-Ups, join relevant groups, seek free advice.
- Starting: I have so often heard people say they will start their business ‘when’—when the kids have left school/college; when the mortgage is paid off; when the market is more positive; when I have perfected the prototype; when I have got the finance in place. My observation is that in most cases of the delayed start, the start never happens. I started a business in 1982, the lowest ebb of the UK economy since the great slump. But everyone else was in the same boat, whether established or not and it sharpened my financial argument as to why my product was so cost-effective. Now is the time, and if some things are missing, like finance, discover how small you can start, not how much money you need.
- Priorities: Everything is urgent. Deciding what your priorities are is tough, without a doubt. But you must make best use of the limited time you’ve got, and you have to be tough on yourself. I know that I am always tempted to do the things that I like best or that I’m good at, first, but I counsel against that approach. Not that I’m a fan of military strategy, I do like the Eisenhower Method for priority setting: a simple grid.
- Business Plan: Thin ice and it’s easy to fall through. Business plans are more of a concept than a formula. Most budding entrepreneurs think they must have one with all the bells and whistles. The apocryphal Amazon growth flywheel looks likes the sketch on the left. It does two essential tasks of of any business plan: it describes succinctly the value proposition of the business (what makes it unique for the customer)—and—the business model (how the business creates revenue). The sketch looks deceivingly simple, but it’s the kernel of what makes the (now) behemoth tick. Fifty pages full of charts, tables, spreadsheets and appendices is great, but what you have to achieve is say what this business is, why it’s special and how YOU are going to make it succeed. I just counseled a young team with a 50+pp plan and nowhere was there any mention of the two founders and why they had the skills to make the venture fly.
- Money: Of course, money! But here’s the thing: it’s not worth worrying about money. What you should be concerned about are three things. First: Do you have enough money in the bank to get to the next stage or tomorrow—this is called cash flow. What you can do is to be very actively doing a cash flow forecast and updating it regularly, even daily, to be sure that you can keep up with expenditure. This will become the most important financial activity once the business is off the ground. If you keep forecasting, you will be aware when things are going to get tight and you can take action ahead of time. You can never forget it, but may cease to be the top priority when things are swinging. Second: Decide not how much money you need to start the business, but how little. The earlier you can start trading and building your revenue the better. Only if your business needs upfront investment in fixed assets will you need to set the perfect startup budget. Otherwise see how much financial bootstrapping you can do (see the Venture Founders Insight on Bootstrap Finance). Third: Make sure that you start earning revenue as soon as you can. It may mean you delay one or two things, but consider if you can offer product at a discount to early buyers, so that you can get some cash and more important, get feedback on their experience; can you offer consulting in the field where your expertise lies. The money will show you that you can sell and start building new relationships in your targeted marketplace.
- Pitching: Maybe you did a business plan competition, or learned how to pitch at business school, but it not, it can seem quite daunting. It need not be so. There are some six simple rules. One: Keep it simple and realize that it will take time to reduce and reduce, as well as rehearsing over and over—especially learning to look at the audience and preferably to meet eyes with one member. Two: Go for a ‘grab’, something arresting, and hopefully personal that will have an emotional effect to engage the audience. Three: When you have their attention, describe what you are trying to do, preferably with illustrations, maybe pause and focus on one individual and ask them a question that will lead you to give an answer relevant to your venture. Four: Show why your solution is going to work, either through supporting evidence, third party endorsement, or examples of early success. Don’t over do the numbers but know them backwards so you can answer any questions. Five: In your rush of adrenaline don’t forget the vital last step: seek an action or next step from the audience.
- Selling: Sales should be the most important task at the outset, when the business is reliant upon you. You may not be great at sales, according to your own lights, but you are the best able to achieve them, assuming the business is viable. It’s easy to become disheartened (I was), but failing to close a sale should provide important lessons—don’t be ashamed to examine what went wrong. When I started, I imagined that I had to get my products in front of the customer right away and extoll their virtues, instead of trying to find out what the client needed and then play to those needs. I quickly learned not to be pushy and hone my listening skills. Also I learned that my product was not perfect for everyone. I realized that the prospect was not always rejecting me personally.
- Hiring: Phew, this is tough. My early efforts were not good, even taken one of two other co-founders did not work out. The day I was due to fire the person, he resigned. That was a great relief. I had invited him to join our venture because I knew his skills and intellectual capacity, because I had worked with him for years. I had not really thought through he is personal characteristics and whether he had it in him to be an entrepreneur. Happily he went back to the corporate world for the rest of his career, and we are still in touch 35 years later. It’s tough to figure out whether a person is going to fit in an early startup team, but you must think about that. Will the recruit be happy in a startup environment? Is the person a flexible self-starter? Try to use your network to recruit—chances are that you’ll find a ‘like-minded’ person. Check out what they can bring with them, such as their own networks.
- Delegating: Toughie, because you are probably used to doing pretty much everything yourself. “If you really want to grow as an entrepreneur, you’ve got to learn to delegate,” Richard Branson says. “When my friends and I started up Virgin, I knew that I was lacking vital knowledge on some subjects, and so I started learning this skill very early on in my career.” I’d say that is the only way the venture will grow. In the natural course of events the organization will be very flat to begin with, but tasks have to be disaggregated progressively.
- Time: Yes, there is never enough of it. For the 11 years of my first business, it was pretty much 24/7, even if not in doing, certainly in thinking. The first time we went on vacation I called in every day, but the next time I learned not to call at all. Your imagination and creativity will suffer if you have no changes of scene and your batteries will go flat. Look again at Challenge #3 on Priorities; it bears reading again.
- Doubt: Only reckless entrepreneurs (who fail) have no doubt. Doubt is good and needs to be shared, to get input from others whose judgement you value. It is not a sign of weakness, rather one of strength. Cockiness is not a good characteristic for entrepreneurs. Stick with doubt, but not to the point of indecision.
- Criticism: During the preparatory stages to my first startup, I don’t think I received any positive feedback to the idea, except from my co-founder. All the criticisms were gems of wisdom. Each one had the seed of how the business would end up flowering. If people told me the idea would not fly, I would always ask why. The answers were always so informative and ended up being free consulting. I remember one business school professor whose reasons for counseling me against the risk, showed me the biggest benefits of our offer. My father told me that I was risking the family’s welfare. Wow. He told me not to do it. But what a gem that was! I realized that I could risk the business, but I was not going to risk the family home with a second mortgage, I was not going to offer the bank a personal guarantee. If the business went belly up, I knew I could go find another job.
- Exhaustion: Exhaustion goes with the territory, but we need to find ways to cope with it. Living on a Mediterranean island for years I learned the art of the siesta. Even a 20-minute nap will be restorative. I went to a boys boarding school in England and we were obliged to take 30 minutes after lunch either sleeping, reading or listening to classical music. It was good training for my entrepreneurial career, but you will find your own means of quickie R&R.
- Risk: I have found that if I tell people that I am an entrepreneur, they almost always use the word risky in their response. I correct them to explain that, yes there’s risk, but never reckless risk, always calculated risk. Risk mitigation is something I always stress to the people I mentor. There are so many ways to look at downside risks, so that should you find yourself in deep yoghurt, you know at least one way to climb out. This sounds like a depressing thing to do when you are intent in getting your venture off the ground, but it’s rewards are significant. If you don’t know how to go about it, look at these Venture Founders Tools: Critical Success Factors, Force Field Analysis, Goal Tracking Tool, Risk Mitigation, SWOT Analysis, Variance Analysis.
- Failing: Fail first and succeed from the learning, like many famous entrepreneurs such as Jeff Bezos of Amazon, Milton Hershey of Hersheys, Reid Hoffman of LinkedIn, Steve Jobs of Apple, Fred Smith of FedEx, Evan Williams of Twitter. Failure is not a liability, it’s an asset. According to Bloomberg, entrepreneurs who fail find more success the second time around. Even fear of failing can be a spur to examine alternatives. Quitting is a different matter. Perseverance is a super quality for entrepreneurs.
Do not let any of these entrepreneurial challenges stop you in your tracks. Expect them, and if you do, then you will be able to confront them