The Biggest Challenges Entrepreneurs Face When Starting a Business — and How to Overcome Them

Starting a business is an exciting undertaking: you get to be your own boss, shape your team, and be responsible for bringing your vision to life. But as any seasoned entrepreneur will tell you, the path to success comes with its fair share of obstacles. From learning curves to financial hurdles, understanding the challenges that lie ahead can help ensure that you have the right mindset and strategies in place to overcome them.

In this post, we break down the most common issues entrepreneurs can expect to face when starting a business, and offer valuable tips from our experts on how to make those first steps easier.

1. Insufficient Business Planning

Starting a business without adequate planning is like setting off on a road trip without a map or GPS: you might have a general sense of the direction you’re headed in, but without a clear route, you’re likely to get lost along the way. Many first-time entrepreneurs underestimate the significance of planning, but having a proper business plan and doing your market research can help guide you to success.

Why Have a Business Plan?

“When you’re building a business, there are lots of opportunities that are before you. But chasing all those opportunities at the same time, when there’s only so much bandwidth to go around, produces diminishing results,” says Christian Dawson, Open Eye’s Co-founder and Executive Partner. “If you chase two rabbits, you catch none. What a business plan gives you is the opportunity to figure out which rabbit you’re going to chase.”

A good business plan should:

• Articulate the company’s mission statement to ensure that all strategies, goals, and actions align with the overarching vision.
• Include a SWOT analysis that identifies the business’s strengths, weaknesses, future opportunities, and potential threats.
• Feature a competitor analysis that provides insights on how to refine your strategies, find your unique selling points, and seize opportunities in the market.
• Have a plan for the business’s growth that can be adapted over time.

What About Market Research?

Focusing too much on the big idea can overshadow the importance of market research, leading to costly mistakes down the line. Understanding your target audience, the demand for your product or service, and potential geographical challenges, will position you for growth and help you make better informed business decisions.

2. Ineffective Marketing

Even the most innovative products or services can falter without good marketing, resulting in wasted resources, slower growth, and missed opportunities. That’s why it’s important to build a comprehensive marketing strategy that considers your target audience, competition, and the channels to reach potential customers.

“The most successful marketing campaigns really take into account the mission and the values of an organization,” says Dawson. “They should consider the specific problems that the group is trying to solve with their business plan, and show that they have a full understanding of the people that they are trying to target.”

3. Founder Knowledge and Skills Gaps

Being a business owner is a steep learning curve, and it’s not uncommon for founders to encounter questions they don’t have the answers to, or discover skill sets they need to develop. To bridge these knowledge gaps, founders should:

• Commit to ongoing learning by reading industry-related books, taking online courses, attending workshops or participating in webinars.
• Keep up with industry news and trends by subscribing to relevant publications, newsletters, and podcasts.
• Consider finding a mentor—either through mentorship programs, business associations, or by reaching out to people in your network—with expertise in areas where you lack knowledge or skills.
• If your budget allows, hire a consultant that can provide specialized guidance on specific challenges or projects.

4. Founder Well-being

Entrepreneurship can take a toll on a founder’s well-being—especially during the first year. The weight of new responsibilities, coupled with the uncertainty of the future, can often lead to self-doubt, isolation, and mental, physical, and emotional exhaustion. But your company can’t be at its best if you’re not at yours, so looking after your health isn’t just important, it’s essential.

“Hustle culture tries to squeeze as much as possible out of individuals in ways that aren’t sustainable,” says Dawson. “The most successful companies that we work with are ones that really do try to create a healthy working environment.”

To prevent burnout and reduce stress, make sure to keep active, eat well, manage your time efficiently, and prioritize work/life balance.

5. Poor Financial Management

Cash flow problems, failure to accurately forecast sales, and overspending can be detrimental for a new company, so entrepreneurs should prioritize financial literacy or enlist the help of a financial advisor.

Dawson recommends outlining metrics for success directly in your business plan, so you can track and manage expenses in a way that gives real visibility into the cost of goods sold. It’s also important to regularly monitor your financial health and, when possible, set aside funds for unexpected expenses.

6. Inadequate Funding Source

Securing money from investors or obtaining debt financing can be difficult, especially for first-time entrepreneurs. But strong financial management and strategic fundraising efforts can mitigate these challenges.

Make sure to explore various funding options, including crowdfunding or sourcing loans from angel investors or venture capitalists. Demonstrating clear value and growth potential to possible investors can increase your chances of securing external funding.

Revenue shortfalls are also common in the early stages of a business and can hinder growth. To prevent this, entrepreneurs should focus on creating a detailed financial plan that accounts for all potential expenses and revenue streams.

7. Human Resources

In the early stages of starting a business, some entrepreneurs struggle with delegating responsibilities as they transition into a leadership role, but it’s important to recognize that you can’t do everything on your own. Having a strong team behind you ensures that you can focus on the big picture without having to worry so much about the day-to-day operations.

Be sure to invest time into developing a recruitment and hiring strategy that identifies candidates who align with the company’s vision and culture. “To build a great team, you should really be articulating what kind of person will thrive in your environment,” says Dawson. “Someone may be an awesome person, but not the right fit for your team, and that’s okay.”

While starting a business can feel overwhelming at times, preparing for the challenges ahead can increase your chances of success and help you navigate the entrepreneurial gauntlet with confidence and resilience.

At Open Eye, we understand the unique challenges entrepreneurs face when starting a business. If you’re looking for personalized guidance, one of our expert partners can help. Contact info@openeye.email for more information. Contact us here.