Starting new business ventures is not always problematic. Nevertheless, new enterprises present challenges that are significantly different from those of established corporations (Longenecker, Petty & Palich, 2011, p. 31). The complexity of a new venture and the entrepreneur’s preparedness to meet the demands of the new business determine the severity of the challenges encountered.
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One of the major challenges in new ventures is raising adequate capital. The entrepreneur alone understands the new business. Therefore, convincing investors about the viability and profitability of the new enterprise is challenging. Furthermore, most investors prefer established enterprises to new ones. Established businesses present minimal risks and have certainty of returns to investment (Hisrich, Peters & Shepherd, 2013, p. 73).
Entrepreneurs also experience challenges in assembling a suitable business management team. A business team plays a vital role in complementing the entrepreneur and covering up his or her weaknesses (Hisrich, Peters & Shepherd, 2013, p. 73).
The strategic business team should have specialists in the various aspects of the venture. In addition, attracting and identifying good employees is quite challenging. The location of an enterprise is synonymous with success. Getting a location that is accessible and close to the target market is quite challenging. Equally, attracting good customers is challenging. Good clients exhibit loyalty to the firm and its products.
On the contrary, bad clients search for loopholes in the enterprise and exploit them. Dealing with competition is yet another major challenge for start-ups. Most entrepreneurs see competition as peril for their ventures. Nevertheless, competitors are benchmarks for creativity and motivation for innovation (Longenecker, Petty & Palich, 2011, p. 37).
A new firm’s growth strategies should focus on its clients, and the implementation of the business plan (Longenecker, Petty & Palich, 2011, p. 31). At inception, new firms should focus on their core business. The core business comprises of the products, clients, distribution channels, and locations that yield revenue.
The entrepreneur should focus on attaining the set rate of revenue expansion and customer satisfaction. The entrepreneur should establish the performance indicators, the core customers, the enterprise’s competitive edge, threats, and the available growth opportunities.
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New ventures should also focus on attracting customers by making high-impact value proposals to the clients. The aim of high-impact value propositions is to create willingness among the potential customers. This strategy encompasses customer segmentation, creation of appealing high-value propositions, and field testing (Longenecker, Petty & Palich, 2011, p. 31).
New ventures also require execution growth strategies. The execution growth strategies provide a supportive environment in terms of organizational capabilities, management performance, and strong leadership practices (Longenecker, Petty & Palich, 2011, p. 31).
An entrepreneur should build his or her organization’s capabilities to enter the market, create appealing products, and provide outstanding customer service.
Performance management is also essential for the growth of the venture. It enables the entrepreneur to assess the achievement of the desired outcomes and take corrective action. Lastly, the entrepreneur should create a supportive environment by providing good leadership to a new venture (Schermerhorn, 2011, p. 46).
Cash flow management is vital to the success of new ventures (Hisrich, Peters & Shepherd, 2013, p. 43). Ineffective cash flow management is a major cause of financial strains in entrepreneurial ventures. An entrepreneur can manage cash flow by ensuring that receipts are more than payments.
Cash inflows should be sufficient to ensure funds are available for paying suppliers and reinvesting. The entrepreneur should also make forecasts of cash needs. Forecasts enable the entrepreneurs to make contingency plans to deal with shortfalls. Indeed, cash flow management is critical to the survival of entrepreneurial firms (Schermerhorn, 2011, p. 58).
Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2013). Entrepreneurship (9th ed.). Boston, MA: McGraw-Hill Irwin.
Longenecker, J., Petty, J., & Palich, L. (2011). Small business management: Launching and growing entrepreneurial ventures. Stamford, CT: Cengage Learning.
Schermerhorn, J. R. (2011). Introduction to management. New Delhi: Wiley.