Okay, folks, let’s get down in the dirt for a minute. It’s all fun to talk about abstracts in theory or strategy. But business—real business—is done on-the-ground and to the sound of blasting cannons. So, today, we’re taking a stab at more real-world challenges to starting a business.
And what you can do to overcome them (with two big tips to start).
Now, if you’re expecting cotton candy or rose-colored glasses, you haven’t been paying attention. I remain adamant that it has never been less viable to own a small business in America. In fact, you’d have to be out of your God damned mind to think about launching a new enterprise. There’s deflationary pressures, technocratic overreach, supply chain disruptions.
But let’s not get ahead of ourselves.
Because, Yes, You Can Hand Me the Straitjacket First
And the reason is that I’m still launching another new business.
Now, you might wonder why I’m not heeding my own warnings. Or whether or not I expect to be truly successful or not. And those are great concerns; ones you should be asking about.
You see, my story is very similar to many other entrepreneurs.
One day, I woke up, and I had an idea. That’s literally it. Whatever you’ve heard, starting a business isn’t about some clear, linear process. Or some easy trick to success. It’s often more about an up and down rollercoaster of emotions, reactions, and even wild guesses.
And I’m exactly the same as you in that regard. So, right now, if you’re in the initial stages of starting a business, we’re looking at these at the same time.
But what’s different about this journey this time? That’s our first higher-level tip: experience matters. When you’re facing challenges to starting a business, you can get an edge by having a mentor.
Or talking to people who have been there before.
And btw, I Need to Speak to Whoever’s in Charge Here
Since you’re now on this same path, one more high-level suggestion before we get down to brass tacks. This one is a big challenge for many first-time entrepreneurs.
Despite what people have sold you, our journey is a difficult one. Eventually, you realize that there aren’t always right answers. What’s more, everyone has an opinion on how to run a business…
Take two books that influenced me during my own time running a creative agency.
The first is Built to Sell: Creating a Business That Can Thrive Without You. In it, it outlines how marketing-based businesses should shed their general approach. And instead, strive for what I would call a hyper-niche (in the book, they do nothing but design logos). Then, they can get the most skilled staff, perfect your process, and scale up. This creates a valuable business you can sell off one day.
Then there’s our second book. This one, The Marketing Agency Blueprint: The Handbook for Building Hybrid PR, SEO, Content, Advertising, and Web Firms takes a very different approach. Rather than hyper-niching, the author suggests hybrid-agencies are the future. This allows more flexibility in a complex industry. Due to this fact, you can charge more for custom, high-level work.
Both books were great. But they also seem to contradict each other on the details. Which one is right?
It doesn’t matter. At least not really. Because no one person has all the answers. And the business world is amazingly open-ended. You can structure a business in a million different ways. Bottom-line: At the end of the day, you want to burn this fact into your head… the authors aren’t the ones making the decisions in your organization.
Challenges to Starting a Business (and Possible Solutions)
So, as the person in charge, you’ll have a lot on your plate, even when you delegate. And these are just some of the possible demands you’ll face no matter what business you’re starting. In every bullet point, I’ve chosen questions that I’m asked again and again by new entrepreneurs.
Strategic and Logistical Decisions
Let’s get some of the more procedural challenges to starting a business out of the way first.
- Should you start a business with partners?
Having partners has its pros and its cons. But you don’t have to look far for horror stories involving them. Although I don’t have any hard data at-hand and I’ve known people who have made it work, I suggest skipping it if you’re a first time entrepreneur.
- When should you ditch your day job?
There’s a fine balance to getting this question right. Juggling the demands of a day job and a small business are not to be taken lightly. And that extra flow of revenue is always nice. My recommendation is that, when you have a solid bank of operating capital, to take the jump. The longer you wait, the more you’ll be drained. But when you do ditch yours, prepare for the uncertainty.
- How do you hire good people to get the job done?
For most people, they’ve probably not had a lot of hiring experiencing. Still, getting to the point where you need to hire your first employee can be exciting. Now you can delegate! Even if you’re choosing contractors, go with whoever has the most successful experience doing exactly what you need done. This is one of the most risky tasks in business, and you want the highest chance of success you can get. Nix anyone who doesn’t have a respectful attitude.
- How do you know your product or service idea is ready?
You don’t. Another variation of this question I get asked is, “how do I know my business is ready?” Books like The Lean Startup have pioneered an approach based on “proof of concept.” Or put simply: don’t worry about perfection. Because you can always continue to tweak the process. And at some point you have to say “fuck it” and trust your gut with your idea once you’ve stressed tested it.
- How do you deal with your competition?
I’ve personally seen competition psychologically consume small business owners. By doing so, they’ve locked themselves out of industry groups, shrunken their opportunities, and become bitter. To start, you have to accept you’re going to have competition (and sometimes they will screw you over). But gravitate toward and cultivate relationships with the ones with good character. You’ll open up the possibility of increasing marketshare for both of you.
- How do you get more organized? How do you have good time management?
Organization isn’t a magic bullet; it’s a process. The same holds true for time management. And you’re going to have to get better at both no matter who you are. Subscribe to the blog of your favorite productivity app and give it a read now and again. Then get disciplined.
- What about my work life-balance?
And on the subject of schedules, I’m asked this question a lot. Answer: you won’t have a work-life balance. The best you can do is to carve out time only for family, friends, yourself, however small. And while this is difficult for most entrepreneurs to do, it is strongly recommended.
- What’s the most key action you can take in strategy and logistics?
Keep up with changes in your industry and in the broader marketplace. Have the barriers to entry changed recently in your field? What about that new gizmo everyone’s talking about? Consume news and read regularly but also have opinions on some of it. And learn from the mistakes and rewards of other companies.
These challenges to starting a business, in my opinion, are where things get dicey. Many businesses fail for the simple reason that they hit some sort of significant financial hurtle.
- How do you secure the working capital to launch?
Most of us aren’t Elon Musk or Jeff Bezos, both of which enjoy government favor. Although budding entrepreneurs may believe it’s easy to get a business loan or investment money, this is not really the case. As a matter of fact, during my first business loan, the bank told me they were giving it to me more based on my hard-nosed attitude than anything else about what I was doing. Instead, I recommend saving up some amount of money before you fully launch and pull away from your day job.
- What if you don’t know anything about business finances?
Start learning…immediately. Whether we’re talking about free cash flow or EBITA, these are good concepts to get very familiar with. And if you can, hire an accountant you trust the moment you can afford it. Finally, if you have any issue financially differing gratification, get it under control now.
- How should I arrange to charge clients or customers?
There are a variety of ways to bill clients, from invoicing on net 30 or net 60 to taking deposits. Learn what’s most common in your industry and see if it applies to your situation. However, from my experience, always be willing to go with what works for you. Case in point, my agency charged clients weekly for any outstanding work, increasing cash flow but lowering the barrier to entry for any clients uncomfortable with retainers.
- How will I deal with unexpected or unforeseen expenses?
Whereas small businesses are accepting bailout money left and right, keep in mind, doing so will make you more fragile. Plus, there’s an easy way to deal with surprise expenses. And that’s by always earmarking part of your profit to an operational savings account. Not unlike how you would do for your personal finances, this helps establish a fund to deal with disruptions or even government intrusion.
- How much will I save on my taxes every year?
I’m always surprised how many regular people think that tax write-offs are a form of magic. You still have to spend the money on an approved purchase. And know a good deal about the tax code. At any rate, it’s not free money. Still, I recommend learning the most common write-offs in your industry to start.
- How quickly will I start making serious money?
I can’t even count how many new entrepreneurs I’ve known who made one big mistake. And that’s how they opened their doors and thought they’d be rich overnight. But no, people will not magically start flocking to your doors when you open. And they won’t respond to weak promotions or gimmicks. If you want to start a business, don’t treat this like a get-rich-quick scheme. You’ve got to treat this like a fight.
- What is the single most important financial step I can take?
Prepare an exit plan in your early days in business. When it comes time to call it quits, you’ll be glad that you did. This will give you the confidence to start again one day.
And no matter how hard you try, it’s difficult not to let yourself get wrapped up in the emotions of owning a business. You know, emotions, those things when you’re very invested in something and have a lot on the line. Trust me, they’re going to come up in big and unanticipated ways.
- What are the biggest personal struggles you might face?
At some point, you become aware that you’re in it alone. I can’t tell you how many times I ate crappy fast food alone in an office at midnight. For some people, this realization can be depressing or frustrating. But it makes sense. You can’t really expect anyone else to be as 100% bought into your dream of owning a successful business as you are. Additional, once you’ve come to terms with this fact, you’ll also want to simply accept that you’re going to be put through the wringer and on an emotional rollercoaster. Learn to moderate, put things into perspective, and remain resilient.
- How do you know if you have what it takes to start a business?
Considering it all, you won’t be certain until you do it. Luckily, you’ve started a business the day you say, I’m in business! And make your first sale. Despite all the nitty-gritty, it’s that straightforward. And in the end, whether or not you have what it takes to run a successful business will be up to you.
- Will your experience in the corporate world translate?
Personally, I’m torn on how to answer this question when I’m asked it. On the one hand, yes, some will. For example, if you’ve hired or managed people. But one of the biggest challenges to starting a business is how many hats you’ll need to wear. Plus, you’ll also be constrained in the resources you have available as well as the brand recognition you have. Keep these things in mind.
- Will starting a business open new doors for me?
Sure. That is to say, you’ll probably broaden your network greatly with higher level people. And it doesn’t hurt that people have a certain respect for business owners in America. To contrast, however, most people won’t care about your business. Friends and family will only have a passing interest. So, for this reason, you’ll need to be your biggest proponent and maximize every opportunity created from your ownership.
- How do you learn to deal with uncertainty and risk taking?
Let’s talk about uncertainty. Above all, it’s probably the top thing people talk about when it comes to owning a business. And truthfully, most non-entrepreneurial people are used to clocking out at a reasonable hour and getting paid each week. But when you start a business, it’s something very different when your ass is truly on the line. But crisis brings opportunity. And when you foster gratitude, connection, and other activities in your life, the risk-taking becomes second nature. And after all, most regular people never see how at-risk they are with their single source of income from a corporation where they have little control.
- What is the biggest psychological consideration you should keep in mind?
Above all, everyone is going to have an opinion on your business. And how you should run it. From the smallest daily decision to the most abstract strategies, you’ll get tons of advice.
And most of it will be totally useless shit. And that’s because half of it won’t apply to your situation and the other half will be naïve. You’re going to have people hate on your idea and even on you. And for this reason, I always recommend being diligent about who you surround yourself with.
While you could write books on almost every one of these concerns, my hope is that you’ve started to see what we’re dealing with here. But I promise, it may seem like a lot at first, but it gets better as you become acclimated to the experience.