Although the potential rewards are great, starting a new business at any age is fraught with risk. For younger people, however, the challenges are multiplied. Lack of experience, inadequate financial resources, and a lack of self-confidence all contribute in one way or another to make it tougher for a young entrepreneur than an older counterpart.
As a result, many young entrepreneurs fail to make the grade. But those that do succeed are those who face the obstacles they encounter with determination and resolve. They know that their greatest allies are the confidence to know that they will succeed against all odds, and the willingness to learn from their mistakes. Here’s a look at some of the challenges young entrepreneurs face and how they can work to overcome them.
5 Challenges Facing Young Entrepreneurs (and How to Overcome Them)
I’m convinced that about half of what separates the successful entrepreneurs from the nonsuccessful ones is pure perseverance.
– Steve Jobs (more quotes)
1. Hiring staff
Most young entrepreneurs likely have never managed people before. And if they have, the experience they have built up doing so is probably limited.
When they come to hire their first workers, therefore, their skills will be tested to the ultimate. It is never easy being the boss and even harder when you are the owner of the company and your profitability is at stake.
Rules need to be set up involving such aspects as working hours, vacation time, overtime pay and work output. Salaries need to be negotiated, complaints against workers lodged, and people might even need to be fired or laid off. That’s not even to speak of staff fitting the company culture or of employees working together as a team.
Young entrepreneurs should make this process a little less onerous by being careful to hire people who will not only have the right skills for the job, but will also fit in well with the company culture. Take your time and consider each employee carefully; check all references and do not allow yourself to be blindsided by glib talk.
2. Lack of capital
Almost all new ventures require seed capital — money that is available to see them through those first rocky months or even years before they turn a profit. Some types of businesses need more money than others. Almost all need money for marketing.
Older people who start their own ventures usually need less financing to do so than younger entrepreneurs. The reason is that their experience in the field, knowledge of how the business world works, and connections within the business world, some built up over many years, provide a great boost to their start-up businesses. As a result, they generally are able to turn a profit sooner and need to rely on financing for a shorter time.
Most young entrepreneurs, however, do not have those benefits available to them. That means that they need money to sustain them while they gather that experience. In addition, younger people have not had the time to accumulate savings in the way older people often have, and are likely to owe more in loans and on credit cards than their senior counterparts.
The lack of capital means that they have to struggle to survive while waiting for the checks to come in. This can be extremely stressful.
To avoid this situation, young entrepreneurs should write a detailed business plan that will give them a good idea of how much money they will need to survive before becoming profitable. Armed with that total, they should seek to find it. Friends and family and even a local bank or credit union might be able to assist them.
3. Decisions, decisions, decisions
Whereas as an employee you generally did what you were told, now you are the one calling the shots. Doing so involves making a lot of decisions. Even without employees, you are going to be called upon to make decisions all day, from smaller ones to major judgments that could change the direction and future of your company.
Among the most important decisions are those that involve creativity and ideas. If an aspect of your company is not working as it should, you will need to make a decision to discontinue it or amend it. You will need to decide whether the company should embark on a whole new path in search of greater profits — or, if it does not work, potentially great losses.
It’s stressful and will cause you to have self-doubt. Here’s where your entrepreneurial skills come into play. You will need to believe in yourself, be confident that you do have the ability to make the right decisions, and never doubt your good judgment.
4. Criticism and self-doubt
As a young entrepreneur, you will find that not everyone will take you seriously. They will tell you that you are too young to build a successful business. They will be quick to tell you just what they think you are doing wrong. At times, the criticism and the self-doubt it fosters might get to you. As your business struggles to get off the ground, you could start to doubt yourself.
You might wonder whether you should have started your business after all.
At times like these, tell yourself that determination and resolve are what distinguish the successful entrepreneurs from the rest. Do not give up. Believe in yourself and you will succeed.
5. Lack of brand image
As a young entrepreneur builds a business, creating the right image is vital. Customers must come to trust your brand. They must recognize that you know what you are doing and you know how to do it well.
As you build your brand, ensure that you are putting the customers first, providing them with the quality goods and services that differentiate you from the competition. Take all complaints and comments, particularly from your customers, seriously and do all you can to respond to them and change your operations if necessary.
Remember that if your main aim is to satisfy the customer you will make money. If your main aim is to make money, you will fail to satisfy your customers and your business will ultimately fail.