Lots of people are drawn in by the allure of entrepreneurship. After all, you get to ditch corporate life and call all the shots. But, while there’s a ton of potential upside, running a business is not always glamorous.
You’ll need to do a lot of legwork before you even start your business.
You’ll decide whether to build your business on the side of your day job or go all in. And, you’ll have to figure out which business structure is right for your enterprise.
Then, once you’re established, being an entrepreneur is fraught with obstacles almost every single day.
Let’s explore some of the biggest challenges you may encounter as an entrepreneur, as well as some solutions for curbing them before they even surface – or facing them head-on if they do.
Challenges of Entrepreneurship
We’ll classify them under 4 different umbrellas:
- Mindset Hurdles
- Money Challenges
- Business Problems
- Life Concerns
Entrepreneurial Mindset Hurdles
1. Having a vision
If you go into business impulsively or solely to escape a less than ideal employment situation, you won’t have a clear purpose or vision for your enterprise.
This lack of vision will make it impossible for you to create and stick to a strategy. Without a defined strategy, your business decisions will be scattered. Ultimately, your business will likely fail because it will never gain traction.
The fix? Know why you’re becoming an entrepreneur. Run towards a goal rather than race away from an issue. With this vision in mind, map out a plan for your business and make all of your decisions based on that plan.
2. Dealing with uncertainty
Being an entrepreneur involves a lot of uncertainty. You’ll deal with a general sense of ambiguity regarding your business’ chance of success. You’ll also be faced with many day-to-day unknowns.
Will your customers pay their invoices on time?
Will website visitors like your new color scheme?
Can you really trust your new business partner?
The list of questions will be endless and it can be overwhelming.
The fix? Embrace the fact that uncertainty is a natural part of entrepreneurship (and life!), but realize you can take action to mitigate risks.
Do your due diligence, create contingency plans, and consider business insurance (if not already required).
Then, reassure yourself that you’ve done everything possible and refocus your attention on growing your enterprise.
Bonus reading: How to Adopt an Abundance Mindset
3. Enduring self-doubt
Becoming an entrepreneur takes courage and a belief in oneself. However, even if you’re usually confident, you may sometimes endure moments of self-doubt.
Self-doubt can leave you questioning your abilities (known as impostor syndrome) and your decision to start a business in the first place. It has the potential to totally derail you because you’ll distrust every move you make.
The fix? Squash self-doubt like the insidious bug that it is!
Regularly review your accomplishments and how far you’ve come. Read customer testimonials praising you and your business. Disregard those negative voices in your head, and embrace the truth: you are capable.
4. Curbing impatience
Your business fulfills an important need and you want to help as many people as possible.
As an entrepreneur trying to execute on that vision, it’s normal for you to feel a sense of urgency. However, if you’re not careful, that sense of urgency could turn into destructive impatience.
Destructive impatience may look like abandoning a sound business strategy too early because it didn’t yield instant results.
Or, it could result in burnout because you’re working crazy hours to move the needle. In either case, your impatience could mean the end of your business.
The fix? Understand that building a business takes time. Try to enjoy the process rather than fight against it. And, realize that steady, incremental growth is actually a blessing.
When you experience a meteoric rise, it can be difficult to keep up both as a business owner and as a person.
5. Overcoming analysis paralysis
As an entrepreneur, you’re tasked with making a lot of choices — some significant and some regarding relative minutia.
Naturally, you always want to make the best decision for your business. But with the vast amount of options available, it’s incredibly easy to let decision-making take up all of your time.
When this happens, you’re experiencing analysis paralysis. You spend hours combing through data without taking any action. You become more of a researcher than an entrepreneur, and your business results reflect that.
The fix? When you see this happening, nip it in the bud and evaluate the decision that you’re trying to make.
If it’s a small decision, just make it. If it’s a significant decision, determine what information you still need and commit to choosing once you have that info.
Remember, in most cases, you can change your mind later if necessary. Don’t stress over getting it perfect.
Financial Challenges of Being an Entrepreneur
1. Lacking capital
It takes money to start and grow a business. And, in some cases, it requires a significant sum. If you lack the necessary capital, you’re stuck. You either can’t launch your enterprise or you can’t take it to the next level.
The fix? Before doing anything else, create a clear business plan that includes estimated funding needs. Then, identify potential funding sources.
Funds can come from your own money, loans or gifts from loved ones, money raised through a platform like Kickstarter, cash brought in by an investor or business partner, or loans from a bank. Ensure the capital you can secure, meets (or exceeds) your anticipated needs.
2. Having inconsistent income
When you’re an employee with a consistent schedule, you know how much you’re going to get paid. That’s not the case when you’re an entrepreneur.
Some months, you may do a ton of business. But, some months may be very slow. This is especially true for seasonal enterprises.
The inconsistent income (and corresponding cash flow) can make it very hard to budget — both for your business and personal life.
The fix? Thankfully, it is possible to budget with a variable income. The most important thing to do is save some of the money you make during your good months. That extra cash will help keep you afloat during tough times.
3. Separating business and personal finances
When you’re a brand new business, it’s all too easy to keep your business and personal funds in one account — especially if you’re a sole proprietor.
However, doing so can be problematic at tax time because it’s tough to tell which expenses belong to the business and which ones belong to you personally.
In addition, if you form an LLC, commingling your funds could negate the protections of the business structure.
The fix? Create clear boundaries between your personal and business finances. Have separate bank accounts, debit cards, credit cards, etc. And only use each account for its designated purpose.
4. Dealing with late payments
Most of your customers will pay you in a timely manner. But, sooner or later, you’ll probably have to deal with chasing down a late or missed payment.
Depending on how much you’re owed, one late or missed payment can really impact your cash flow.
The fix? Have customers sign off on contracts that explicitly cover payment terms. Your payment terms should include clauses regarding late fees and your collections process.
It may also be a good idea to have a lawyer on standby in case you’re unable to collect a large sum.
Bonus reading: 10 Finance Tips for Small Businesses
Business Problems Faced by Entrepreneurs
1. Finding customers
To be successful, you need a steady stream of paying customers. But, finding them isn’t always easy. Once you’ve tapped out your current network, you may be wondering how to secure more buyers.
The fix? Continuously expand your network. The new people you meet could become customers. Or, they may be able to refer others to you.
You’ll also want to have a website where customers can find you and market yourself on social media so prospects can easily find you online.
2. Lacking sales skills
It’s one thing to attract customers. It’s quite another to seal the deal. If you don’t have a sales background, you may struggle with the sales process. And, if you don’t make enough sales, your business can’t survive.
The fix? Good news — you can learn how to sell. Once you understand the psychology involved and practice overcoming some common objections, you’ll close a lot more deals.
Remember: selling doesn’t have to feel sleazy. If your product or service can truly help a customer, you should sell it to them!
3. Wearing multiple hats
As an employee, your role was probably singular and pretty well-defined. But, as an entrepreneur, you have to wear multiple hats, sometimes simultaneously.
You’re responsible for sales, marketing, accounting, human resources, customer service, and more. Juggling all of these duties can be daunting!
The fix? When you’re just starting out, take a deep breath, and pace yourself. But, when you have the financial means, outsource some of those functions.
For example, if you really despise bookkeeping, hire an accountant. Or, if you really struggle with writing or graphic design, hire a freelancer.
4. Managing a team
You may start your entrepreneurial journey on your own. But, over time, you might need to hire help to run your business.
Managing a team adds a whole other layer to your enterprise. It requires a new skill set. And, you’re now responsible for someone else’s livelihood and safety. That responsibility can be overwhelming.
The fix? Consult with an HR expert/employment law attorney to learn about legal regulations and best practices for employers in your state.
Consider hiring freelancers. As long as they’re treated as independent contractors instead of employees, you’ll have fewer regulations to deal with.
Additionally, while there are certainly potential pitfalls, think about hiring family and friends. You already know them, and they’ll be invested in your success.
Entrepreneurial Life Challenges
1. No work-life balance
Having a successful business takes a lot of work. And, being an entrepreneur requires sustained passion. When you put the two together, you can easily make your work the sole focus of your life.
But, that would be a mistake. When you lack work-life balance, your relationships suffer. Your health suffers.
Think back to why you started your business. Chances are, you’re an entrepreneur so you can provide a good life to people you care about or have the time freedom you’ve always craved.
When you’re a workaholic, you’re ignoring your true motivation. Your family’s idea of a good life includes spending time with you. And, there’s no time freedom when you’re constantly toiling away.
The fix? Set clear boundaries — and stick to them. Only work during certain hours. Your business cell phone and email inbox are off-limits during downtime. Make memories with your family and practice regular self-care.
2. Feeling lonely or misunderstood
As a business, you walk a different path than most. And that path is often misunderstood by those who aren’t entrepreneurs. So when the people closest to you don’t “get it,” you may feel very lonely.
Unchecked loneliness can deepen into resentment and depression, which can devastate your life and your business.
The fix? Make friends with other entrepreneurs. They can empathize with you and support you in ways your well-intentioned, but an inexperienced family can’t. And remember, even though your loved ones may not understand what you’re going through, they’re rooting for you all the same.
Final Thoughts on the Challenges of Entrepreneurship
Being an entrepreneur can make all of your wildest dreams come true. But, it can also cause major upheaval in your life if you let it.
While this article doesn’t cover every possible challenge of entrepreneurship you may face as a business owner, it should give you an idea about the major potential pitfalls — and what you can do about them.
Article written by Laura