by Natalia Jones

Created on: December 15, 2009

Starting a new business is always a risk. The success rate of new businesses offers no consolation and coupled with that, there is the natural fear of charting a course into the unknown. Despite these dismal facts, many brave entrepreneurs launch new business ventures every year.

Increased awareness of the challenges that face new business might help to increase the odds of success.

Evaluating the Business Idea

Many entrepreneurs are struck by a lightening bolt of an idea and they immediately become convinced that this will be a great business. However, it pays to slow down a bit and take the time to properly evaluate the business idea from an objective standpoint. This can mean asking friends and family and then casting a wider net to capture the opinions of the target market. This can save a lot of time and money from being pumped into a dead-end venture.

Not Enough Financial Capital

Miscalculating how much it will take to start and then run the business is high on the list of new business challenges. New entrepreneurs often underestimate how much capital they will need and then suffer from a lack of marketing or an insufficient product supply or even an inability to pay for additional help because of this error in judgment.

Insufficient Market Research

The business can be a genius idea, but if there is no market for it then it is doomed for failure. In other words, people need to be willing to pay for whatever it is you decide to sell or you will not make it past the first few months. The only way to properly evaluate this is by undertaking some market research. This means that entrepreneurs need to identify their target market (who will buy the product or service). They then need to develop samples and test the response from this sample group of people and come up with a few questions to get some feedback from them.

Lack of Experience

Starting a new business will most likely require you to wear many different hats. Entrepreneurs need to be able to handle many different roles simply because they may not be able to afford to outsource or hire staff at the start. This is where problems can set in, because someone who is great at sales might not do so well at tracking inventory or at keeping track of finances. The entrepreneur has to be all things, at least in the beginning to have a good shot at success.

Resistance to Change

Small businesses are surprisingly resistant to change. It is often thought that smaller sized companies should be able to adapt to changing circumstances, but they are often the most rigid and the slowest to respond. This may be because they are do not have the resources to sense when demand is changing and to shift gears to fall in line.

New businesses face many different challenges, but being aware of what they are can help entrepreneurs to position themselves to respond instead of being broadsided by the unexpected problems. 

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