Challenges Every First-generation Entrepreneur Faces and How to Overcome Them
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Entrepreneurship is th trend of the day. Recent times have witnessed that graduates from IITs and IIMs have rejected job offers that would have paid them in 8 figures. This is not new and has been going for quite some time now. For various reasons youth today is more inclined towards entrepreneurship. Since last half-a-decade, ‘Entrepreneurship’ and ‘Start-up’ are two keywords that doubled in the Google Search. Business environment is also more conducive than before. However, for first-generation entrepreneurs challenges still remain.
Today’s fiercely competitive business world throws many challenges to entrepreneurs. However, fortunately, in today’s times entrepreneurs are equipped with more resources for tackling those problems than what existed before. The following lists some top challenges faced by first-generation entrepreneurs and solutions so one can operate an efficient and successful business.
No Prior Experience of Doing Business
As the name suggests, first-generation entrepreneurs are the first in the history of their family who dive into the sea of doing business on their own. Hence they get very less advice from their closest and most trustworthy people (family). They might have gained some industry experience by working for few years, however starting/running own business is a completely different ball game altogether. And unlike in jobs where their boss and seniors mentor them, there might be nobody to guide them for quite some time.
First-generation entrepreneurs need to be prepared to answer existential questions from family, friends and might be from unknowns too. It will annoy and sometimes depresses but I advise not to get frustrated and continue focusing on the important things in their ventures.
Financial and Legal Complexities
As a first-generation entrepreneur, you get the pinch that most of the rules and policies laid down by the government or private agencies generally work against you. Raising funds is the biggest challenge and grasping all the financial and legal laws that have been made, seem to eat your money even before you start making profits. Risk was always there and it will always be. First-generation entrepreneurs won’t be aware of the breadth and depth of risks involved. Again, if they seek professional advice, they need to pay money for such service, which might be scarce.
“Finance is like a furnace — If you can handle it good, you can make wonderful dishes. If not, it will be a hot seat for you to sit.”
The foremost challenge for any entrepreneur is raising capital funds.
There are many ways for funding — from traditional bank loans to family and friends to venture capital, angel investors, etc. You can choose these routes, certainly, but I strongly advice the self-fueled growth model in which you fund your own business plans. Think about where you want to be five years from now. Can you get there without help, even if you have to delay growth a bit while you’re doing it? If you do feel you need funding, be sure to seek professional advice to ensure you’re not giving up too much of your business to get it.
Robust cash flow is essential for survival. Entrepreneurs struggle to pay the bills, while they’re waiting for payments to arrive. By the time the client pays the invoices, entrepreneurs have to pay everything from employees’ salary to your mortgage/rent and grocery bills. Waiting to get paid can make it difficult to run business smoothly.
Proper budgeting and planning are critical to maintain cash flow. One way to improve cash flow is to constant focus on outstanding and aging receivable and try to get an advance payment for your products and services. Your advance payment can partly cover all expenses associated with a given project or sale. Always pay in time to your suppliers, so that you can also address cash flow management by asking your own vendors to invoice you at 45, 60, or even 90 days to allow ample times for your payments to arrive.
Dealing with People and Convincing Them
Whether it is a service or product, a first-generation entrepreneur finds it difficult to deal with the stake holders be it vendor, clients or a high ranked officer in a company. The entrepreneurs realize that major chunk of their effort is wasted in dealing with these people in place of focusing on their targets. So, to overcome these challenges, try to convince your client by showing small POC, so that they don’t have any doubt about your capabilities, pay bill in time, so that vendors give you best rates and credit and give proper respect, share in profit to your key employees, so that they stay with your company even though its small.
Building Strong Team and Retaining Them for Sufficient Time
Every entrepreneur wants to have a great team but they face challenges like that they cannot pay employees much and in those difficult times they might not be able to pay employees regularly. The skilled and talented professional is looking for a big brand, fat salary, bright and secure future from day one. First-generation entrepreneurs face difficulties to pitch his/her idea and philosophy to team so that they are ready to work and stay with them even when they are not offering the team what established companies would offer such professionals.
While entrepreneurs discussed their business idea with family, expectations are undoubtedly to follow. Now when they start facing external challenges and if they are internally not well settled, then they will themselves be a challenge to handle. First generation entrepreneurs need to be cool headed, strongly determined and extremely passionate about their work.
Strapped Budget for Marketing
Even though cash flow is fine, entrepreneurs many a times never have enough in their budget to market their company to its full potential. The key is to prioritize marketing efforts. Spend money on proven marketing techniques that are sure to work instead of experimenting with other marketing methods.
Instead of trying to become a big corporation overnight, I advise first-generation entrepreneurs to focus on their initial core customers. While finding new customers, consistently strive to deliver remarkable quality to those customers you already serve. Word-of-mouth will spread, and more customers will come looking for you. Your business will grow slow and steady, and you’ll be able to solve problems while they’re small.
Below are the pieces of advice I would like to give to the first-generation entrepreneurs of India for growing and succeeding in this industry.
- Collaborate with the partners across the globe to expand to newer geographies thus growing the footprint and reach of the company
- Try to come up with innovative idea, rather than copying some other workable products.
- Always introspect and ask question yourself about your business idea.
- Hunt and retain the best talent and be a Cheer leader
- Try to select less travelled area, so that you can create your niche.
- Always give credit to your team and take responsibilities on your shoulder.
- Invest in newer technologies that will drive the future
- Keep robust funding opportunities
- Align yourselves with experienced industry stalwarts
For a first-generation entrepreneur things are more towards survival and then charting out a gradual path of growth. Ten years from now, kids may look back at these successful entrepreneurs and will be inspired. Kick start your journey to being a successful entrepreneur with these habits: Read a lot, set short-term and long-term goals, connect with positive people and be humble.