The idea of starting your own business can be tempting. As soon as the idea pops into your head, you’re likely to fantasize about the freedom.
It’s easy to imagine:
- You’ll be able to make your own decisions.
- You’ll only do work that you want.
- And you’ll only work with people who are easy to get along with.
However, here are 5 challenges you may never have thought you might have to face:
1. Your business is experiencing negative cash flow.
After you have launched your business, you made the mistake of giving customers 30, 45, or 60-day credit. As a marketing idea, it worked as well as you had forecast. Unfortunately, as a financial idea, it created a negative cash flow situation. Let’s suppose that you started a small delivery business. You raised enough money to get a few vehicles to haul small packages around for a niche industry that needs packages delivered as fast as the big package delivery companies but since it’s a local business and you know the fastest routes and you have low overheads, you’re able to charge a much lower price. It’s a successful business model and the phone rings all the time and your delivery drivers are always on the road. Although all your customers were honorable and paid your bills when they were due, you had to wait a month or two to receive payments. Meanwhile, you still have to pay your small office staff, your delivery drivers, and all your office, equipment, and fuel expenses.
The solution is to use an invoice factoring service. A financial company will buy your invoices and give you the money you need within 24 hours. They will then collect their money from the customer when the bill is due. This is not a loan, but you do pay a small fee for the service. You get from 80% to 90% of the invoice. The reserve is placed until the finance company can collect from your customer. This is later released back to you and you only pay a small fee for the factoring service.
2. Customer’s aren’t paying their bills.
While a long delay in payment can cause negative cash flow, no payment at all can cause serious issues. You will experience serious difficulties if you have one big client who doesn’t pay you, or you have several small clients who don’t pay you. Perhaps, you started a small web developer services to small businesses, mainly home-based businesses. You charge $3,000 a website, but it takes a week’s worth of intense effort to perfect the website. In some of the worst case scenarios, it takes you two weeks to complete the website. Now when people don’t pay you, for one reason or another, it can be pretty upsetting. Worse still, you now have to spend quite a bit of your precious time trying to collect the money. Meanwhile, you have less time to do the work that your good clients are paying you.
The solution is to hire a debt collection agency to take care of it, and move on to catching up with your good clients who do pay without a problem.
3. Your cash-only business is struggling.
You have started a cash-only business with some good money saving reasons why you would never take credit cards. Unfortunately, you have to turn away many customers who don’t carry cash.
The solution is to change your policy. Cash is rapidly giving away to plastic. It’s a trend that you can’t hope to buck. If you stick to your guns, you’ll continue losing sales, lose business to your competition, and continue to irritate people who want to buy your products and have to make a special trip to the ATM to buy your stuff.
4. You’re feeling lonely and isolated.
The Harvard Business Review reports that “half of CEOs report experiencing feelings of loneliness in their role, and of this group, 61 percent believe it hinders their performance. First-time CEOs are particularly susceptible to this isolation. Nearly 70 percent of first-time CEOs who experience loneliness report that the feelings negatively affect their performance.”
The solution is to find more ways to network with your peers and top executives.
5. You’re confused and overwhelmed.
You are overwhelmed because you didn’t realize business was so complicated. You are working all the time, and things are getting progressively worse.
The solution to overcome high stress and overwhelm is to hire an executive business coach who can help you reorganize your business so that you’re not doing all the work all the time.