Every entrepreneur is a risk-taker and always an optimist. Risk taking means an entrepreneur will venture into an area expecting to make profit. Some are “lucky” and can make a profit. For others, the adventure goes totally wrong. What is even worrying is that, sometime along the way, some entrepreneurs will face, health, family, emotional and financial storms. These are the realities of entrepreneurship which make it a game that is not for the faint hearted. Or actually, not a game at all.

As you start the entrepreneurship journey, here are some of the common challenges that you may likely face and must work around in order to end up victorious.

Limited product diversity

Small businesses tend to have very few varieties when it comes to products or services on the market. This is mainly due to their concentration on producing a particular product or service of their expertise.

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But it becomes a source of much trouble for businesses when product variety is limited. Failure to diversify means a company will rely on a single source of revenue. When that source is disrupted, the business is in danger.

Diversification of products, as a small enterprise, is therefore of immense benefit in terms of revenue generation, but the process should be handled with extreme care, especially in business infancy.

This is a challenge for many start-ups, and as you journey on, find mechanisms to address it in order to be innovative in your product diversification.

Hiring wrong people and losing excellent talents

Small businesses typically have limited capital too. Attracting the right skillsets and keeping them then becomes highly critical because you must ensure that every dollar is spent on getting the right people.

You need employees that can perform at least more than one function. Yet this is not always the case; start-ups and SMEs most often attract or hire the people with very low skillsets or are merely seeking a salary at the end of the month. But even when you can attract the right employees, they are unable to remain and grow with the fledging enterprise due to either financial considerations or the absence of proper systems and procedures in the infant company. It is important to expect this and plan well ahead of time.

Losing clients

At any time in your entrepreneurship journey, expect to lose some clients. These will abandon your services or products for a myriad of reasons: location, change of taste and cost preferences. Right from the onset it is important, to know who your core customers are and strategize to come up with creative ways of serving them well to retain them. In this case, every small business should strive to penetrate the market as much as they can with effective ways of satisfying their customers.

Preparing for this will ensure you are never taken by surprise.

Investigate the loss of a client and find ways to win them back. This is the hallmark of effective entrepreneurship.

Insufficient Cash Flow

Cash flow deficiency is endemic to most small businesses in Africa. Obviously, it becomes one of the causes of many business failures. By being cash strapped, day-to-day operations become difficult or impossible.

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Businesses with very creative ideas have collapsed because they did not have money at hand to take care of recurrent expenditure such as salaries, electricity, transport, and other production cost. This is a challenge that is expected to arise, if you run a start-up with very limited financial resources, and it is imperative that you sharpen your cashflow management skills from day one in order to avoid your vision shutting down for lack of operational capital.

As always, at Human Capital International, (HCI), we are at hand to walk this journey with you. Send us your comments and inquiries and we will get back you.

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