Launching a new business and wondering what you might be up against? Here, we shared some risks and problems you’ll face when starting a business.
Starting a business comes with a lot of risks.
Understanding them ensures you don’t join the 10 percent of startups that fail in their first year or the 90 percent that fail in the long run.
Also, research shows that first-time founders only have an 18 percent chance of success, while those of previously successful businesses have 30 percent. So succeeding with your first startup doesn’t guarantee success for the next one.
So, we have compiled some of your business’s problems to make it easier for you.
Recommended for You: How Small Businesses Can Grow In 2023
Top 9 Risks You’ll Face When Starting a Business
Here are some of the problems you’ll face as a startup founder:
1. Managing Cash Flow
Prudent cash flow management is crucial for startups.
Recent studies show that 82 percent of newly founded small firms become unsustainable during the first five years due to weak cash flow.
Failure to raise cash when firms need it (either through debt/equity financing or raising sales revenues) or failure to reduce unnecessary spending are the two primary causes of improper cash flow management.
Several reasons why businesses lack the required start-up capital include:
- Rejected loan requests
- Establishing quickly with limited personal resources
- Poor financial planning
- Unexpected expenses, etcetera.
Also, the inability to prioritize and properly allocate financial resources is another reason startups struggle with their finances. They could cause:
- High labor costs
- Debt from constantly seeking financing options
- Unnecessary spending
- Loss of assets
- Business failure
Also, a lack of capital to support marketing initiatives or inventory turnover causes small businesses to experience operational difficulties.
Pro Tip: Read 4 Super-Smart Instant Funding Options to Grow Your Business Fast.
2. Finding a Suitable Niche
Another risk of launching a new small business is finding its specialty and showcasing its worth to satisfy market demands. In a recent study by CB Insights, the second most notable cause of the business collapse was failing to identify a profitable niche.
It’s common for marketing research results to include some subjective component.
So small businesses must pay attention to their customers’ major needs and concerns to help position themselves to satisfy those needs and desires while swiftly providing them with evidence of their relevance.
Both actions are essential to reduce this particular risk.
Pro Tip: Failing to discover a suitable niche might result in poorly optimized services and is often a result of disregarding or misinterpreting customers’ opinions. So, always
3. Handling Competition
Starting a business means you’ll have many competitors to deal with.
Besides those in your niche, you’ll also have to face businesses offering related services like airline and train companies if you’re into mass transit, shrinking your market share even further. But competition is not all bad.
It helps you differentiate and become better at what you do.
To beat the competition:
- Seek patent protection for their intellectual property to shield it from rivals.
- Improve customer service
- Align brand image with customers’ interests and values
- Differentiate your offering
- Use data to personalize your offering
- Explore unconventional marketing channels like Quora, Pinterest
- Dominate organic searches with SEO content marketing services
Pro Tip: Get Tailored SEO Content Writing Service to Dominate Organic Competition
4. Market Expansion
Subsequent years will bring about continuous growth in the global economy. Therefore, small firms should consider expanding into new areas to boost their reach and sell more.
While there are dangers involved with the market expansion of new small enterprises, like dealing with channel conflicts and having to acquire unfamiliar cultural practices and comply with new regulatory frameworks,
The expansion also brings new workloads, which may overwhelm your workforce.
Pro Tip: Plan for sales channel conflicts before exploring new markets or distribution channels.
5. Operational Challenges
Like the aforementioned risks, operational issues in the workplace are a constant concern for small business owners.
Operational management examines how you run your company, including its effectiveness and how well you utilize your time there.
New small enterprises are constantly in danger of losing to established players and wasting time on processes that can now be automated.
Most of these firms are reluctant to embrace modernization. For instance, research shows that only 25 percent of small organizations can claim to have automated operations in at least one business unit, compared to 40 percent of major corporations.
Most of these small firms fear that automation might cost them a fortune.
Fortunately, several choices are available to companies that can boost productivity while being affordable and simple to adopt.
For instance, inventory management software can automate orders, forecast optimal stock levels, and send emails. They can also sync with fulfillment centers to help relieve logistical issues, enabling the business to focus on more pressing issues.
And they don’t cost an arm and a leg.
Pro Tip: 35+ absolutely must-have business tools to grow your online business fast.
6. Business Scaling Issues
Scalability is essential for enterprises since they need a lot of sales to stay in business.
Scaling a business entails laying the groundwork for your company’s development. It implies being able to develop unhindered. For effective scaling, planning, financial backing, and the appropriate partners, employees, systems, and processes are necessary.
If your market size limits your ability to grow your income, consider how you might broaden your offerings of goods and services while preserving current revenue streams.
Pro Tip: By diversifying your firm, you may avoid spending excessively on one product or service and keep your current clients while growing to attract new ones.
7. Failing Sales Funnel
You need to ensure you’re consistently making sales, even after you’ve got your client’s interest and they understand your worth.
Without it, emerging small enterprises run the danger of becoming complacent. If you discover that your conversation rate is poor, you’re not alone: A study indicates that the average cart abandonment rate is above 80 percent.
Sadly, most e-commerce companies lack the advantage of a well-trained sales force that can personalize sales processes for each new client. However, they can leverage chatbots, email automation, and content marketing to guide them to conversion
Cart abandonment rates can significantly increase because of seemingly unimportant elements like the number of steps required to complete a purchase or how you inform your customers about deliveries.
Pro Tip: If you’re experiencing high website traffic or product views but low purchases, consider streamlining your process or clarifying what clients may expect from subsequent actions.
8. Entrepreneurial Fatigue
Starting a business is demanding and stressful.
To avoid experiencing entrepreneurial burnout before their new small business becomes established, new small business owners must prioritize the sustainability of their efforts in expanding their enterprise.
About 72 percent of business executives have mental health problems because of excessive, ongoing stress. Fortunately, recognizing the warning signals might help you release some tension.
Without a level head, managing a small firm successfully is impossible.
Pro Tips: Try to carve out time for yourself and develop discipline around how much sleep you need if you find that you’re becoming irritated, exhausted, or forgetful.
9. Unforeseen Circumstances
Unforeseen circumstances are one of the biggest startup risks.
They result from unexpected situations you can’t control. For example, a national ban on some goods and services will see several companies shut down because they’ll lose their primary source of profit and might not have the means to switch to a different market.
Other unforeseen circumstances include;
- Employee resignation
- Unexpected lawsuits
- Personal health issues
- Natural disasters, etcetera.
Pro Tip: identify uncontrollable circumstances your business will likely face and create a contingency plan for each. Also, have an exit plan for the business.
Top 11 Growth-Related Problems You’ll Face While Starting a Business
As a business owner, you’re likely to encounter several hurdles as you try to navigate to success. Let’s explore the top 11 problems you may face when starting a business and provide practical solutions to help you overcome them.
1. Dealing with Local Search Visibility
Many small businesses face the challenge of low local search visibility, resulting in potential customers struggling to find them. An astonishing 46% of all searches are location-related, showing the importance of local SEO.
The local market is like a battlefield, where businesses compete for dominance. To win, you must have a solid online presence. And that is where search engine optimization comes in. However, pulling this off to rank on the Google front page is not a walk in the park, but these tips put on the right footing
Use keyword tools to write search engine-optimized articles
You can use keyword tools SurferSEO for this purpose. SurferSEO is a comprehensive tool that can enhance your website’s local search visibility. It provides advanced keyword research and content optimization features to help your website rank higher in local search results.
Create a Google My Business listing
This free tool allows you to manage how your business appears on Google Search and Maps. You increase your chances of being discovered by local customers by providing accurate and up-to-date information, such as your address, contact details, and business hours, y
Optimize your website for local search
Weave local keywords into your website content, meta tags, headings, and image descriptions. SurferSEO’s AI-powered keyword research can assist you in finding the most relevant keywords for your business and target audience.
2. Finding the Right Search Keywords
When internet users look for information online, they turn to search engines armed with specific keywords that hold the key to their queries. Many businesses don’t know what these keywords are, and so they create content blindly.
If you use the right keywords, you will position your content right in front of their searching eyes, generating lots of free traffic. But here’s the catch—choosing the right keywords can be a challenge. That’s why 90.63% of all web pages get no organic search traffic from Google.
But here are what you need to do to join the other 9.3%:
Leverage keyword research tools
Use keyword research tools to uncover different keywords you can rank for. Marketing Miner comes recommended as an excellent keyword research tool. It’s one of our favorite tools.
The software provides comprehensive data on search volumes, keyword difficulty, and related keywords, allowing you discover high-value keywords that align with your business goals
Analyze competitor websites
You can also use Marketing Miner to gain insights into your competitors’ keywords and content strategies. Identify the keywords they are ranking for and consider weaving them into your own content strategy.
The tool can help you find the right search keywords for your business by analyzing your competitors’ strategies and understanding your target audience’s search behavior.
3. Understanding Your Customers
According to a survey, 84% of customers say that being treated as a unique individual, rather than just a group, is crucial for attracting and retaining their business. So, understanding your customers allows you to establish a personalized connection and build strong relationships.
Many businesses, for whatever reason, fail to treat their customers as unique individuals, which can be off-putting for them. Of course, you don’t want to repeat that mistake. So what do you have to do?
Keep reading to find out.
Conduct Market Research
Conduct thorough market research to gain insights into your target audience. There are many market research tools you can use to identify their demographics, purchasing behaviors, and pain points. This information will help you tailor your offerings and marketing strategies to meet their needs effectively.
Leverage Hotjar to Gain Customer Insights
Hotjar is an exceptional tool that provides heatmap and user behavior analytics for your website. You can use its heatmaps, user session recordings, and survey features to gain valuable insights into how visitors interact with your website.
4. Generating a Steady Lead Stream
Generating a consistent flow of qualified leads is essential for business growth and sustainability. But many businesses still struggle with lead generation, costing them sales and more revenue.
According to research, companies that excel at lead nurturing generate 50% more sales-ready leads at a 33% lower cost. And here are some strategies to overcome this problem.
Create a Lead Magnet
Develop a valuable lead magnet, such as an e-book, checklist, or webinar, that addresses your target audience’s pain points. Offer it as a free resource in exchange for their contact information. This helps you attract potential leads who are genuinely interested in what your business offers.
Harness Collect Chat to Drive Lead Generation
When website visitors start to engage with your content, you can use powerful live chat software like Collect Chat to engage with them in real-time.
In Collect Chat, you can use proactive chat invitations and customizable chatbots to initiate conversations and capture lead information. You can then nurture your leads and guide them toward conversions.
Learn how we use this software to generate leads in our Collect Chat Review.
5. Building Domain Authority (DA)
Domain authority is the measure of how trustworthy and esteemed your website appears to search engines and visitors alike. It plays a pivotal role in enhancing your website’s visibility in organic search results and attracting valuable traffic.
Every business website starts on a clean sheet and slowly builds its DA through consistent and quality content. However, if you want to quickly pave the way for a robust domain authority, consider these ingenious tips and elevate your website’s standing:
Create High-Quality Content
Craft informative, valuable, and engaging content that resonates with your target audience. Focus on producing articles, blog posts, and other resources that provide unique insights or solve common problems within your industry.
Obtain Backlinks from Reputable Websites
Seek opportunities to acquire backlinks from authoritative websites within your industry.
Guest posting, collaborations, and building relationships with influencers or bloggers can help you secure valuable backlinks. These backlinks act as endorsements, signaling to search engines that your website is a trusted source.
Adsy is our favorite platform for sourcing high-quality platforms. The website curates high-domain websites you can reach out to for guest post opportunities. This Adsy review article will guide you on maximising this platform to boost your search ranking.
6. Streamlining Social Media Management
Social media is vital for connecting businesses with their audience and driving brand awareness. From experience, businesses that effectively manage their social media accounts experience increased brand visibility and recognition.
A report by Sprout Social found that 70% of consumers feel more connected to brands with active social media presence. However, managing multiple social media accounts efficiently can be time-consuming and overwhelming. But here’s how you can streamline your social media management:
Stay cohesive with Sendible
Sendible is a social media management tool that simplifies the process of managing various social media platforms. It allows you to schedule posts, monitor engagement, and collaborate with team members all from a centralized dashboard.
Create a Content Calendar
Develop a content calendar that outlines your social media posting schedule. Plan and schedule your posts in advance, ensuring a consistent and organized approach to social media content creation.
7. Getting Enough Referrals from Customers
When satisfied customers recommend your business to others, it reinforces your reputation as a trusted and reliable provider in your industry. Yet, convincing customers to actively provide referrals can be a challenge, despite the potential benefits.
This is because, while 83% of satisfied clients are willing to refer an offering, only 29% actually bring referrals in. but these tips can help you generate more referrals:
Ask for Referrals:
Ask your customers for referrals—it’s that simple. Reach out to satisfied customers and politely ask them to refer your business to their friends, family, and colleagues.
Offer Incentive using LoyalZoo
use a customer loyalty program like LoyalZoo to increase customer retention and engagement. By rewarding customers for their loyalty, you create an environment where they are more likely to refer your business to others.
8. Creating Enough Engaging Videos
Videos have become an increasingly popular medium for connecting with customers and promoting businesses. But this is quite a challenge, especially for new businesses that don’t know engaging videos for their niche. To create engaging videos, consider the following tips:
Keep Your Videos Short and Sweet
Attention spans are shorter than ever, so aim for concise videos that deliver your message effectively. Capture viewers’ interest within the first few seconds and maintain their engagement throughout the video.
Use Contentreel.io
Leverage contentreel.io, a content marketing tool, to research relevant topics, create compelling videos, and distribute them to your target audience. This tool streamlines the content creation process and ensures your videos align with your audience’s interests.
Tell a Story
Stories resonate with audiences on an emotional level. Craft a compelling narrative that connects with your viewers, evokes their emotions, and reinforces your brand identity.
9. Scaling Content Marketing to Dominate Search
Content marketing is a powerful strategy for attracting new customers and establishing industry authority. But many businesses fail at it. According to a survey, only 42% of B2B marketers consider themselves effective at content marketing, indicating a significant portion of businesses struggle to achieve success in this area.
But let’s see how you can scale your content marketing efforts effectively:
Publish High-Quality Content Regularly
Aim to produce valuable and relevant content regularly. Consistency and quality are key to building credibility and attracting a larger audience.
Utilize Frase
Frase is a smart tool that helps businesses and content creators with automating tasks and improves their content. It offers a range of helpful features such as content editing, keyword research, and content analysis to provide valuable insights.
With Frase.io, you will easily identify areas where your content can be improved, find relevant keywords to target, and even get a content score to evaluate the quality of your work.
10. Finding the Right WordPress SEO Plugin
When it comes to running a successful online business, search engine optimization (SEO) is crucial. However, finding the right WordPress SEO plugin can be a daunting task. Here’s how you can navigate through the options and find the perfect fit for your business:
Read reviews
Take the time to read user reviews and testimonials of different WordPress SEO plugins. This will give you insights into the experiences and opinions of other users, helping you make an informed decision.
Use RankMath
One highly recommended WordPress SEO plugin is RankMath.
It offers a comprehensive set of features, including advanced SEO analysis, XML sitemap generation, keyword optimization, and schema markup support. RankMath is known for its user-friendly interface and powerful SEO capabilities, making it an excellent choice for businesses starting their online journey.
Check out Rank Math Vs Yoast comparison article.
11. Retaining Existing Customers
While acquiring new customers is important, retaining existing customers is equally crucial.
Customer retention leads to increased customer loyalty and repeat business, which is more cost-effective than constantly burning top dollar on ad spend to get new customers. But how can you effectively retain your existing customers?
These tips can help:
Provide excellent customer service
Deliver exceptional customer service by promptly addressing customer inquiries, concerns, and issues. Make it a priority to provide personalized and tailored support to build strong relationships with your customers.
Use a customer retention tool
One of the best customer retention tools on the market today is ActiveCampaign. ActiveCampaign is an excellent customer retention tool that combines email marketing, marketing automation, and customer relationship management (CRM) features.
This tool helps to create personalized email campaigns, automate customer journeys, and track customer interactions. Its comprehensive suite of tools allows you to nurture customer relationships effectively and increase customer retention rates.
Wrapping it Up
We have seen some of the top risks and problems startups face. Following the tips in this resource can help you navigate them effortlessly and grow your small business. Some of them are self-inflicted, so you might want to be careful while running your business.
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