You’re probably thinking of starting your own business but have many worries and concerns on your mind.
- According to US Census, business formation have spiked in July 2020 with 552,748 business applications and maintaining higher than pre-COVID, with 432,034 new business startups in Nov 2021
- The failure rate for all new businesses in the US is at 20% for the first year and a reported 90% of all new e-commerce companies fail within the first 120 days. (businesstown.com)
Is it hard to start a business? It is easy to start a business with record-growing applications but it is difficult to start a successful business. Before you dive into any planning, you have to remember that 90% of any business will fail even if you put in the hard work.
Whether you’re thinking of running it as a side hustle or a full-time job, you still have to dedicate time, energy, and money to make it work, even in the planning stages before the actual operations begin.
There are many difficulties and obstacles you have to overcome in order to start a business, and hopefully, this article will remind you of these crucial factors to take into consideration before you embark on your journey to becoming an entrepreneur:
A good action plan and budget timeline, the various calculations you’ll have to frequently make, as well as the non-stop creativity and ideation needed to market your products.
What is the hardest part of starting a business?
From the very start, you will have to spend a lot of time, effort, and resources to draw out a comprehensive action plan so that you know where you’re headed with your business idea and how to execute it. Tesla's master plan is still being executed and only halfway there (2 out of 4) after 15 years (at least from 2006)
- Create a low volume car, which would necessarily be expensive
- Use that money to develop a medium volume car at a lower price
- Use that money to create an affordable, high volume car
- Provide solar power. No kidding, this has literally been on our website for 10 years.
It’ll only get increasingly challenging for you in the later stages when you have already started your business, but remain clueless about the specific actions to take at certain timings and the various scenarios to consider.
To come up with a good action plan requires you to invest your time and effort to do research and find out the following factors:
- specific action to take for a certain goal, department, or people that will be in charge, start date,
- midway milestones,
- end date,
- resources required, as well as the
- desired outcomes.
It’s crucial that you take into consideration each and every action you think you might need, or any potential problem you want to address. As such, you might also want to include possible risks and feasibilities while planning.
It is better to anticipate and prepare for all the situations that could go wrong than be totally unprepared and in shock when things don’t turn out as expected. This step is very crucial in the planning stages and it might already be a huge challenge for you right from the start since extensive research will have to be done.
However, as Benjamin Franklin once said, “By failing to prepare, you are preparing to fail”.
Drawing up a comprehensive action plan will therefore help you anticipate and prepare for anything that might go wrong once the business is launched.
Calculating Costs and Profits in A Business
Next, even though the costs and expected profits can be calculated with the help of a budget table, cost savings are still very important but difficult to achieve.
- Just like a budget for any event, creating a budget tablet, which lists out all the materials you have to purchase along with the respective suppliers’ prices, allows you to track your expenses, identify your cash outflow and point out the areas where you can save on some of these expenses.
- Moreover, since suppliers’ prices are likely constantly changing, especially in the current uncertain pandemic situation where raw materials may be hard to access, a budget table can easily draw your attention to the areas that you may be incurring great cost.
The budget table is often done at the very start of one’s planning stage so right from the onset, it will help you to identify the costs of the various materials that you’ll need to begin operations.
It sounds easier said than done — having such organization of your finances to ensure that you’ll know exactly how much capital you need to acquire any materials required.
But the difficulty lies in estimating the costs and revenue. It may be easier to calculate the costs, but to determine the approximate amount of profits, you will have to do further research on consumer tastes and preferences towards the kind of products you’re intending to sell.
Ask yourself these questions: Is anyone else selling similar products? What is the market like for these products?
If you proceed with your business idea after gathering some opinions, you will also have to ensure that the price set can sufficiently cover your costs and bring you profit, but doesn’t vary greatly from the prices of other similar products.
A budget table can help you come up with a very realistic idea of the expected profits you may earn, but if you are unable to calculate these costs as accurately as possible, your actual expenditure may greatly exceed your initial budget and instead of making a profit, you’ll make a loss from starting this business.
Moreover, to best estimate these costs, you’ll likely have to spend a lot of time and effort to do extensive research on the prices of different suppliers and take note of these for every material you wish to acquire.
This budget table also has to be updated at least once a month to make sure that you know exactly how and where your funds are being channeled to.
As such, you may find it difficult to juggle between organizing these and running your business, especially if you’re the only one managing the business. Such control and awareness of finances are extremely key in any business, and it will take you a lot of time and effort to organize these. You need to be prepared for endless calculations and sleepless nights spent researching prices and ways to cut costs but still ensure your product is of a certain quality in order to make it attractive to customers.
Marketing mix through creative and innovative strategies
Speaking of which, you’ll have to couple these plans and research with further marketing and creative strategies that will allow you to achieve the ultimate objective of opening your business: making money.
Cost savings are important to ensure you have enough money to sustain the business and make a profit, but it is equally crucial that you come up with ways to distinguish your product in the market to ensure that customers are always more attracted to your product.
In today’s context, anyone can start an online business on various social media platforms easily or come up with very similar designs and products. Starting a business, then, is so difficult because it is easy for anyone to open a business but yet very hard for one to stand out in the eyes of the customers and sustain in this competitive environment.
Right from the onset, it is important to come up with strategies and actions that contrast your competitors’ products and allow customers to recognize that your product has unique features.
Of course, it is, again, easier said than done.
Product differentiation can help you make a name for yourself and increase brand loyalty but it is often difficult, especially for someone who is only at the planning stages of your business and likely has little capital.
There are many factors to consider when engaging in such a strategy — functionality and practicality of the unique feature(s), or the costs and resources required to differentiate your product. Such differentiation requires you to constantly survey and, to some extent, guess customers’ tastes and preferences.
There is always risk in such marketing strategies as there’s no guaranteed revenue from adding such special characteristics into your products; What is special to you may not be so for your customers. Once again, a lot of time, effort, and resources have to be spent on this strategy that, more often than not, only top-tier and established firms can engage in because of the sheer costs and research & development required to engage in such innovation. It is hard to create a strong customer base with brand loyalty, but you should always aim for this ideal and link your strategies back to the overall goal of businesses to make a profit. Product differentiation is therefore a key consideration that you have to keep in mind albeit the difficulties.
All in all, even if you have sufficient capital and have managed to write up good plans, what's most important, ultimately, is whether you are prepared and willing to allocate enough time and effort for this entrepreneurial journey you’re about to embark on. Even coming up with the action plan and budget table in the planning stages requires you to manage your time very well to prepare these key tools to the best of your abilities. Starting a business is therefore a journey fraught with many challenges, and it can take a toll on you if you do not have good plans, sufficient capital, or energy and creativity to constantly compete with other sellers. A business venture is never going to be easy, especially if you’re not prepared to invest a lot of time and effort.