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With the ever-expanding Internet, entrepreneurship has become a real phenomenon in recent years. The ability and opportunity to start a business right from one’s own living room has inspired millions of people across the world to start flexing their creative muscles. The prospects of being able to earn a living while operating as one’s own boss is something that has caught on with individuals who never imagined such an opportunity might present itself.
The New Entrepreneur It wasn’t so long ago that entrepreneurs were generally younger individuals with a vision and access to capital to get their concept off the ground. They were usually single and/or without children, which tended to make them less risk averse and more willing to take chances.
Due in part to changes in the employment marketplace, the typical entrepreneur has changed in the last 10 years. Based on numbers provided by OnStartUps.com in late 2009, the average age for new entrepreneurs was about 40-years old. 69.9% of the respondents said they were married and 59.7% of them had at least one child. Also, as many as 75% of the people surveyed indicated that they had been previously employed for a least six years before attempting to go it alone. These numbers clearly show that more people are willing to take risks later in life in hopes of building wealth and financial stability in a dynamic and unpredictable economic environment.
Top 3 Challenges of Entrepreneurship It would be rather presumptuous for anyone to believe that the process of starting a business has gotten any easier over the years. The reality is that entrepreneurs today face many of the same challenges as entrepreneurs of years gone by. The primary difference is they might have greater access to larger customer bases because of the reach of the Internet, which has eliminated the need to be overly concerned about locational boundaries. So, what are the three top challenges facing today’s entrepreneurs?
1. Finding the Appropriate Time to Start a Business The old adage that timing is everything is still relevant today. When an entrepreneur has a great idea and makes the decision to start their own business, the temptation to jump right in is overwhelming, especially if the entrepreneur has been working on their concept for an extended period of time. A new business venture demands patience. Before investing too much time and money, it is important to do some market analysis and make sure there is a relevant demand for the product/service being contemplated. If the product is unique, the inventor might want to consider getting a patent in order to protect their idea and possible revenue stream. The entrepreneur will also want to make sure that pricing points are reasonable and verify who their target customer base is going to be.
If all internal factors have been nailed down, it’s time to consider external factors such as the current economic environment. Starting a new business is all about momentum. Unless the entrepreneur has an endless stream of working capital, it’s critical that a new business be able to start generating revenues and create that momentum. If someone attempts to start a business in the middle of a recession like the one that born in 2009, they might find themselves facing a false start with dwindling capital. The point is that entrepreneurs face the challenge of finding the exact right time to enter the market place.
2. Locating Fu nds to Start a Business Contrary to popular belief, there are very few rich people standing on the corner ready to give working capital to first time entrepreneurs. Businesses need capital to function and survive. It doesn’t matter if it’s use for salaries, inventory, operating costs or advertising, the money has to come from somewhere. For entrepreneurs, some of the more popular capital sources are:
Personal Savings
Credit Cards
Business Loans
Private Investors
Regardless where the money comes from, there needs to be a budget and business plan to help identify how much money is needed and what kind of revenue that capital is supposed to generate. If the entrepreneur is looking for financial help from investors and/or banks, the budgeting/planning process needs to be handled in a professional manner in order to illicit confidence. It might be too much to expect for all entrepreneurs to be experienced “business” people. Therefore, they need take the time to cross the t’s and dot the i’s in order to raise sufficient funding for their business venture with minimal financial risk.
3. Navigating Market Conditions Even after doing everything correct, it doesn’t guarantee success. Regardless of industry, all marketplaces are unpredictable to at least some extent. Entrepreneurs face the challenge of negotiating a constantly changing economic environment. Business plans for small businesses are usually developed based on ideal operating conditions. Unfortunately, things are very seldom ideal. The only way to successfully navigate changing market and economic conditions is to have contingency plans and enough flexibility to respond quickly adversity. This would also include having an exit plan to be used under the worst of condition.
The potential rewards that come from owning a successful business make it worth the effort and risk in many cases. By recognizing the inherent challenges faced by most if not all entrepreneurs, plans can be developed to help minimize the potential impact of these challenges. In doing so, the chances for a successful business venture are greatly enhanced.
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