The Six Classic Challenges for Entrepreneurs
For the small business with talented people and great product, the marketplace poses many challenges that can be ominous, if not downright threatening. In our 30+ years’ experience we have found the greatest challenges for running the day-to-day small to medium sized organization are best expressed in terms of leadership enablement. That is, entrepreneurial leadership – including owners, stakeholders, and decision makers – will tell you it inevitably boils down to these six areas:
1) Limited experience
2) Limited competency
3) Limited bandwidth
4) Limited resources
5) Limited time
6) Limited cash
Limited Experience
Many, if not most, entrepreneurs have superior knowledge and experience in their chosen business product areas. However, they often times have incomplete real-world business experience across many areas of critical importance to the ultimate success of their business. A very common example is that many early stage companies have exceptional technology and product development experience, but that is very little experience in marketing and selling, particularly at a scope and level required to geometrically grow revenues.
Limited Competency
Almost by definition, a new startup or an early stage small business is filled with smart, energetic, and often resourceful people. However, the knowledge and skills required to fully operate and manage a successful business inevitably are considerably broader than the founders may have originally anticipated. Skills are needed across all facets of business – leadership, management, product development, marketing, sales, product distribution and delivery, operations, customer service, administration… not to mention the numerous specialty areas expertise such as legal, accounting, regulatory compliance, and more. In general, very few SBE’s have all of these competencies inherently available meet their organizational needs.
Limited Bandwidth
The bane of small business is often heard expressed by leadership in terms of “bandwidth.” In this case we are referring to the management’s and staff’s collective ability to perform multiple tasks on a timely and effective basis. A major area of these tasks is often communication capacity – not as much the technological variety – but the ability of individual personnel to relay critical information to other persons who require that information to perform adequately in the course of doing business. Entrepreneurial bandwidth is also constrained by the ever-increasing volume of “apparent business emergencies” which suck the energy from strategic improvements by the executive team.
Limited Resources
“We never have all the resources we need to perform at the level I would like to see us accomplish…” is a statement we hear from virtually EVERY entrepreneur with whom we have ever worked. In fact, this is the core rationale when an entrepreneur is asked why she/he is seeking angel or venture capital investment – the money is needed to purchase the resources necessary to go to the “next level.” And in the area of Limited Resource, we most frequently encounter limited talent in key areas of business development, marketing and sales. Everyone understands the value of a “business support network.” But few have the insight, time or resource availability to provide the kind of focus needed to build a great network that fully meets their needs.
Limited Time
You need to act quickly to capitalize on market opportunities (as opposed to the limited personal time reflected in bandwidth). In this particular challenge, we are referring to the proverbial “window of opportunity” for designing, developing, testing and launching your marketplace offering. In most cases of entrepreneurial vision, the founding team has developed a concept for a market offering that addresses a critically important need. Especially in areas involving market offerings involving technologies and other innovative services/products, there are frequently other potential offerings under development in parallel timelines. If the entrepreneur desires to gain marketplace advantage by declaring first-to-market advantage with the perspective solution – then the particular time window of opportunity is almost always assumed to be limited. Even in the circumstance where the so-called competitive solutions are not even known to the entrepreneurial team, it is simply a best practice to assume there is limited time to introduce the innovative, new solution into the target markets envisioned by the entrepreneur.
Limited Cash
Are there any SME business owners that don’t religiously use the mantra, “Cash is King?” For the companies that have identified the barriers to success in the form of limited competency, limited bandwidth, and limited resources, the knee-jerk remedy is cash. They have been taught (or programmed) that the main remedy for our limitations is to obtain large blocks of cash in order to purchase whatever is needed to alleviate all They Will Be Giants these limitations that are keeping the entrepreneurs from the outstanding success that their companies so rightfully deserve.
This last one is particularly important. It is certainly no surprise that a typical dream for most startups is to eventually gain the trust – and funds – of investors. The common vision is that with sufficient capital infusion, at strategic growth steps along the path of early stage growth, the enterprise will be afforded sufficient cash to sustain its growth at the desirable rate.
Several problems arise with this particular approach or mindset. Through the course of our book, 'They Will Be Giants’ we address many of these problems. However, perhaps the most significant of these resides in the difficulty of obtaining the funding in the first place.
The simple fact is – the process of researching, applying for and obtaining investment funds from the angel or venture capital communities is indeed a demanding, often complex, and exhausting process.
And, this process is typically an enormous drain on the already limited resources of the entrepreneurial team.
Look out for my next blog post, which focuses on the challenges for both investors and entrepreneurs, and how to successfully overcome them.
