PROBLEMS FACING NEW ENTREPRENEURS – SOLUTION STRATEGIES
In part 1 of this piece (PROBLEMS FACING NEW ENTREPRENEURS ), we highlighted and discussed seven out of the critical but unexpected problems that usually confront young and new entrepreneurs. We defined these young or new entrepreneurs as “individuals who start and run businesses with limited resources and are responsible for all the problems and rewards of their business ventures”. In this part, we will highlight the simple and futurist solution steps that the entrepreneurs can take to manage the initial problems.
The first caution notice to young Entrepreneurs is to avoid being over – excited about their creative ideas or freedom that come with starting their own businesses. They should not fail to pay attention to the “banana peels” that usually litter the pathways of a new business or project. Just as we explained in part 1, most of the issues discussed below were synthesized from the feedbacks that were graciously made available to us by successful start-up entrepreneurs.
The suggested solutions discussed below are meant to draw the attention of the entrepreneurs to consider relevant factors around them. A Philosopher once said that “there is nothing like originality, whatever appears as original is a judicious imitation”. Young or new entrepreneurs can, therefore, feel free to adapt the suggested solutions discussed below to meet their needs.
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A feasibility study should be conducted to determine the viability of an idea BEFORE proceeding with the development of a business idea. The approach involves thinking through the idea and documenting the process. A good feasibility study will take the following into consideration:
- Operational issues (will the idea work?),
- Economics issues (will the costs and benefits be favorable)
- Technical issues (can it be built if it is a project?)
Examples of the questions that the feasibility study will answer are as follows:
- What is the actual product or service?
- Who are the targeted customers?
- What is the benefit of providing the product or service?
- How will you get the product to the customers?
The feasibility study report will provide the entrepreneur with a glimpse of possible constraints and benefits that may surface when the business commence operations. Consultants, Bankers and Financial Advisers may be approached for the work. The Professionals will charge for the work but Friends may do it free.
A business plan is a document that explains your product or service in detail and how you are going to develop and organize your business. While there is no law that says an entrepreneur must have a plan, we know that the lack of “business plan is a concrete plan to fail”! If a new or young entrepreneur desires success, he or she must have a well-prepared business plan.
They will need the document as a resource to convince Bankers, Investors, Friends, non-governmental organizations and community members to solicit for capital. Some of the issues that the document will reveal in detail are:
- A brief summary that covers key parts of the plan.
- Clear definitions of products and services.
- Management team or the pioneer staff and their roles.
- Industry and market analysis to know all the players, their strengths, weaknesses, opportunities and possible threats.
- Marketing plan, packaging, advertising and delivery
- Operations i.e. how the business will run including production, packaging, and delivery.
- Capital requirements and cash flow analysis for the first 6 – 12 months.
- Accounting process – it may help to start with a minicomputer or laptop fitted with accounting software.
Find capital or financing
The entrepreneur must take two significant steps here i.e. 1. Make a diligent estimate of the capital required for the business and 2. Identify the sources of the capital required. Both can be handled as follows:
Estimating the total amount of capital needs of the business as follows:
- Tables, chairs, equipment and fittings
- Raw materials or finished stocks
- Working capital needs for salaries, stationeries, transportation and repairs
- Estimate contingent needs until revenues begin to come into the business
- Make provision for constructions delays, technology malfunction, market access delays, levies, union or association dues
- Set aside a reasonable amount for contingencies i.e. unexpected needs.
Identify alternative sources of capital requirements as follows
- Personal Savings
- Angel Investors – soft loans from family members or relations
- Gifts from Friends, Mentors or Relations
- Banks and Financial Institutions
- Government policy loans
- Church, Mosque or Clubs Support Groups
- Non Governmental Organizations (NGO)
- Grants or supports from International Bodies
The entrepreneur must establish a definite source of capital before the commencement of the business. This is critical to the survival of the business during the slippery commencement period.
As we explained in part 1 of this piece, it is difficult for a talented young or new entrepreneur to handle arrogance. But in order to move from “good” to “great,” everyone should beware of the negative consequences of “arrogance”. Success may be adversely affected by attitude. Let us discuss some of the attitudes that can replace arrogance. The first four attitudes were recommended by Price Waterhouse International in their publication titled “Better Change” published in 1995:
- A new level of honesty – be open, clear, specific and definite when communicating with the staff, customers and board members.
- A new level of courage – to accept strong opinions and make necessary changes that have impacts on the business.
- New respect for diversity – allow ideas to flow freely within your organization.
- New sensitivity to all stakeholders. Their needs and their inputs should be respected
- Get to know people who started similar businesses before you and constantly remind yourself that you are still learning.
- Seek help from those who do it better than you – If you don’t have a skill, you probably know someone who does.
Recruitment: – Avoid toxic Employees
Successful entrepreneurs, whether new or young, are not afraid to hire the right people and pay them well. They must, however, avoid recruiting toxic employees through the following channels discussed in detail in part 1:
- Making recruitment errors
- Ego recruitment (hiring staff to show off your new power)
- Recruitment of Contrarians
- Recruitment without following due process i.e. no background checks
However, if some wrong people have been hired, competent entrepreneurs usually follow the following steps to fish them out and replace them:
- Review of the background checks done during the recruitment stage for adequacy
- Review of the references obtained during the recruitment stage for reliability.
- House cleaning: At irregular intervals, they ask the Staff or Customers (at random) about the toxic people. The assumption is that someone knows. Once they identify the toxic Staff, he or she will be asked to change or leave.
At the beginning the new or young entrepreneur must build a strong marketing team – this does not mean a high number. What it means is “a marketing team that is effective and persistent”. Many of the successful entrepreneurs always start with their network as a foundation before hiring an expert marketer. If the marketing budget is small at the beginning, the entrepreneur can adopt the following creative ways to build a strong network for his products and services:
- Create your own Network – through a common forum/interest
- Volunteer – to help whenever possible e.g. Church or Mosque Associations or Local Charities (NGO) with a large following.
- Talk to strangers – Interact with strangers and introduce yourself. Do not limit yourself to people that you know or trust.
- Search out potential collaborations. The best networking is done between entrepreneurs in different but related fields.
Successful Entrepreneurs are Generous
Let me sound a note of caution here – you need to succeed before you can afford to give back to the society. Most successful entrepreneurs are at the forefront of giving and helping society. The idea is to ensure that you return part of your gains to the people who give you the opportunity to realize your goals. Beyond corporate social responsibility, a successful entrepreneur should be known for the following:
- High-quality product or services.
- Salaries and wages that are commensurate with the services offered by Staff
- Prompt payment of statutory levies or taxes
- Ethical leadership and duty of care for all the Staff
- Transparency and competent handling of Shareholders affairs
- Avoidance of scandals
Success can be intoxicating but young entrepreneurs should always consider the template that they used before the first breakthrough as standards for subsequent expansion or diversification projects.