Challenges young businesses face

Starting a business may be the easiest thing you do. Identifying an opportunity, registering your business, finding premises, fitting them out and hiring staff are all exciting and readily done.

Then you open your doors and start providing goods and/or services and the reality of what you have done starts to set in. As a start up, you may be doing everything at first - findng suppliers, taking and checking orders, making deliveris and printing out the invoices.... and all this in the first part of the day!

It isn't easy. Good time management becomes a critical part of whether you'll succeed or not but it is only the start. We have found through years of working with start-ups, that there are three other key challenges:

1. A lack of strategy. It's easy to imagine a business but less easy to set it up for success. Idealism and reality don't often align in the business world. Competitors respond, customers change their values and your company needs to move with these realities. Worse still is where small enterprises start out not even having a real plan - with no clear understanding of who their customers or competitors are! The pricing model, distribution plan, cost base etc are all just guesses. This is a recipe for disaster.You need two things - first a well thought through plan and second, a reason for being different. Difference is your passport to good strategy, but it requires you to understand your capabilities, your customer needs and your competitor's offerings

2. A lack of scalable systems. Making sales is only as good as collecting the money. We've woked with countless entrepreneurs who have great business ideas, customer bases, strategies etc and who end up struggling because they cannot manage their businesses. They lack sound systems to manage them. Scaling their processes is just not top of mind, and so even simple tasks like stock rotation, invoicing, debt collection etc become nightmares - and often, loss making nightmares. Scaling systems is critical to overcome the time management issue and to ensure that the relative cost base declines as growth increases... adding further competitiveness.

3. Cash flow. It's driven into every business student and every half decent book on entrepreneurship includes it... and yet, it's the biggest reason for failure time and again. Sales don't equal cash flow and neither does the income statement. Being unable to pay your suppliers will not only upset them, but your customers too when you cannot supply them or grow with them. Not having cash also stunts growth potential. Make sure you have enough cash! We work with small businesses to develop great strategy and relevant systems and then we make sure they are cashflow secure.

There are of course a number of other challenges, finding the right staff, increasing sales, managing work/life balances etc but not having a competitive strategy; being unable to manage and monitor growth and running out of cash are some of the biggest.