Problems & Challenges for Entrepreneurs Starting a Business

When starting a business or new project, we think more about success, prospects, financial independence, and perhaps even benefits for the world than about problems. 

A positive attitude and ambition are important, of course – without them, it’s not worth starting. Thus, soberly assessing the situation, anticipating difficulties, and planning a few steps ahead is much more important. 

At Saas Metrics we learned that opening your own business can take some hits in the early stages. To make our compilation more objective, we included the most significant and common problems, which entrepreneurs often face, especially with small businesses.

This guide aims to help those who just now open or plan their own business venture. Let’s get started.

Money Is Never Enough 

Even if you have a “tremendous” amount of initial and ongoing capital, it’s still not enough. It may seem like everything’s under control, calculated to the smallest detail, but you know what they say – it only seems that way. As a first-time entrepreneur, you don’t have enough experience to think of everything. 

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We like to imagine that we can “wear every hat” and do everything alone, considering the best-case scenario – the supplier will provide a discount or a several-month delay, the dev team will make everything in time, the tenant will not be stingy on the “rent vacation,” and sales will immediately go up. After all, right now you have a small business (still), so there shouldn’t be a lot to handle to keep it running, right?

In reality, that’s rarely the case.
You have to fight for your every buck.
But what can one do? 

The first thing you should do is prepare a financial cushion AKA a rainy day fund. This is essential if you are to leave your full-time job to start a new business (so that you don’t have to spend your first revenue on utilities).

To make up for the lack of money (or avoid it), you can make the most of your knowledge and skills. Your first simple page for a new project can be done independently in any online website builder

If you’re good with laws, you don’t have to spend extra money on the registration of the firm.

When you provide services that are not yet on the market, you need to introduce yourself to potential customers (leads). Most likely at the start, you cannot invest a lot in promotion, advertising, and brand image. You may have various reasons for that. With competent e-commercial texts on your website, regular posts on social networks, and several publications on third-party sites can get your customers already in 2 weeks, with no budget! Each order will attract new ones. 

Thus, act in the best traditions of crowd-marketing.

Crowd-marketing is a hidden or “guerilla” marketing tactic. In other words, crowd-marketing is a sort of modern “word of mouth.” You send a recommendation from a satisfied customer/buyer to others by publishing an answer to a question or solution to a customer’s problem. Understanding the difference between fundraising vs. crowdfunding vs. sponsorships is crucial to strategic decisions on such tactics.

Be realistic in your planning – if you have $5000 in your pocket, you don’t want to embark on a global project like a full-fledged online store.

Entrepreneurs Can’t Trust Anyone

When you run a business on a market that’s new to you, you don’t know the rules of the game yet. The web has a ton of reads on honest partnerships, benefits for clients, etc. – everything seems so white and fluffy. 

In reality, frequently are situations where partners, contractors, or suppliers try to turn cooperation in their favor, even at the expense of the other party. 

This, unfortunately, is quite common practice. It doesn’t even have to be outright deception or fraud, but the inexperienced entrepreneur will still lose because of missing a thing or two somewhere and not fixing it all on paper.

The stupidest thing is to take someone’s word for it, like being too lazy to sign a document or refusing to check the product personally. All the words may be just fine, but they can cheat you for money. 

Only you will find out about it later. 

Be careful wherever it’s necessary, look a step (or two) ahead, and consider all nuances and consequences, especially with security and remote work You certainly don’t want to bleed and sweat your project to zero, right?

What can you do? 

  • Learn all the nuances of cooperation “on the shore.” 
  • Show all the arrangements in contracts, estimates, and other relevant documents. 
  • Do not take their word for it and check everything in person – premises, products, out-of-the-box solutions, equipment, etc. 
  • Hire a knowledgeable specialist and thoroughly study all the ins and outs in case you have any doubts on what to look at and what to negotiate.

Entrepreneurs Face Cash Flow Gaps

A cash flow gap is a time in between paying out for something and not getting the money back. 

Read: Finance Terminologies: Acronyms of the Trade

It’s the number of days between a business’s payment for products or services bought and the receipt of cash from its customers for products/services sold. This leads to a necessity to borrow extra funds to carry out urgent transactions.

This “disease” affects not only new businesses – companies that have been operating for 5-10-20 years aren’t immune to gaps either, especially if they make accounting mistakes.

Another issue is that “old-timers” are less likely to run into them – they have experience and well-established processes to manage business performance and outcome variety.

Besides, trusted partners can wait for the money to come in, and getting a loan is safer when you know how things will go. If you’re 100% sure that you will leave the gap behind in a couple of months, you know you will pay it all off at once.

Now a novice entrepreneur is another case. That’s when you don’t really know how to plan your finances. The client flow is unstable. Suppliers and contractors demand prepayment because they don’t trust you yet, and clients work only on a post-payment basis for the same reason. This is when the risk of cash gaps is especially high.

Undoubtedly, a cash gap is always the manager’s fault, which you can’t always foresee. Large clients procrastinate with payment – the biggest delays can be as long as 6 months. However, since your orders keep coming in, you just tighten that belt, write claims, issue invoices, and… keep on working.

What else can you do? 

Establish financial accounting and planning at the start. Meticulously show all your income and expenses (both current and planned) in reports and tables. 

Use quality accounting software tools that help manage finances and foresee cash gaps (there are plenty of affordable solutions for small businesses) and financially educate yourself until you can afford a CFO, especially in SaaS.

Entrepreneurs Have Skeptic Loved Ones

Novice entrepreneurs often complain about misunderstandings from family and friends. “That’s a waste of money,” “You won’t make it,” “I wish you hadn’t quit your job,” “Who needs another online store?” – these are typical things that you hear when you tell your family that you want to start a business. Make sure your business has protection by registering a corporation or limited liability company depending on structure and size you want.

On the one hand, it doesn’t have to affect the success – they can say what they like. On the other, even if you look strenuously repulsed by such conversations, you unwittingly doubt. 

Remember that entrepreneurs are tough. Others may not have faith in them, but this will only inspire them, make one even stronger. That may sound a little exaggerated but, in fact, that’s how it works (generally). 

What can you do in this case? 

It all depends on who tells what – if that’s distant relatives and some couch critics telling you that nothing will work, don’t waste your time – ignore them. 

Now, for people close to you who just don’t understand business and sincerely worry about you, you should probably talk to them, try to explain, and find compromises.

Focus on successful entrepreneurs with experience, find out why they think your startup venture could fail and what you can do to avoid collapse and achieve success.

Entrepreneurs Lack Legal Knowledge

When you open a new business, you may hear something like: 

  • Why are you looking for trouble?! 
  • Have you ever heard about taxes and fees?!

Ignoring legal requirements can play a cruel trick on you. 

Some entrepreneurs learned about taxes, declarations, and simple e-signature months after starting a business (from a tax inspector) when problems had already started. Many also miscalculate taxes, choose business entity types, and then eventually shut down, realizing that taxes and contributions eat all profits. 

Knowing taxes alone is often not enough. 

Errors in contract, corporate, and other areas of law, depending on the field of activity, can also lead to losses and the collapse of a business. Incorrectly drafted contracts can cause significant debt, let alone forgone services.

What can you do this time?

If you can’t afford a lawyer, you will have to study the case yourself, at least business registration, entity types, registered agents, tax regimes, and reporting to your state. 

Next, deal with one thing at a time. Having an experienced entrepreneur who can help you with legal advice in the early stages is always a good idea. 

Be careful with your information sources – you don’t want to rely on the first link you find in Google with legal issues. 

Focus on official sources. Employment and small business support center websites may have information on consultations, webinars, and how-to’s on various matters. 

In addition, each state has its own official .gov site with detailed descriptions of all the procedures and documents required for your particular type of business.

Entrepreneurs Face Life Circumstances

Most people can’t fully immerse themselves in their new business at the start. There’s often a backup job as a temporary safety measure until the new business makes a steady profit. Then there’s family, friends, parents, networking, and various commitments that take time. 

Also, if your first (and only) head office is your home, prepare yourself for distractions and conflicts of interest – loved one’s need your attention, help, and involvement.

How do you handle this? 

It’s all too individual. The only universal way is to sensibly carefully evaluate all aspects of your life at the start and see if you can combine all that with your business. Plan your work schedule, talk to your family, and find compromises.

Entrepreneurs Lack Customers

When you open your first business, you might naively expect a line of customers. However, unless you’re launching some truly unique product that solves a global problem of humanity and has no analogs, that’s a rare case.

In the typical world, novice entrepreneurs have to fight for literally every customer. And their rivals are often stronger and more experienced competitors who have long ago formed a loyal audience and gained credibility in the market.

The uncertainty and distrust of customers are the worst of all evils. All that stands between you and the client is doubt, and a deal is only possible when there’s trust. To remove objections, be as transparent as possible. 

  • Ask your first clients for reviews and recommendations under any pretext. 
  • Give them something in return.
  • Offer discounts and bonuses. 
  • Don’t be too generous, though. 
  • Stay discreet. you don’t want to devalue your service or product. 

Simple feedback about the quality of your product/service on the site and highlighting the best features will allow other customers to gain insights about your product/service. 

Explain to people why you need their help. With each new positive review, with each new piece of content posted, more clients will come to you. It’s like an avalanche – you stop and the flow dies.

What can you do? 

Think about how you’re going to promote your product and attract customers before you invest your first dollar into the new business. Be prepared for no customer lines in the first few months or even years. Meaning there won’t be much revenue, and there may not be any profit at all. This means that you will have to invest in your financial plan to promote and grow our business, pay your taxes, buy services, and support your website until the project starts to pay for itself.

Analyze the market, choose effective channels, develop a strategy yourself or hire professionals to promote your business online.

Entrepreneurship Issues, Wrap Up

That’s it. Of course, a novice entrepreneur may encounter many more problems, difficulties, and obstacles – we’ve shared the most common ones that await almost every newcomer. 

If you think we’ve missed something important or you have a story of your own that you’d like to share, share it in the comments. 

Good luck in your endeavors and may your business grow fast!

Entrepreneurship Issues, Wrap Up

Dimitar is an award-winning digital multi-instrumentalist with authorship in a wide range of digital medium and multimedia starting as early as 2006. With over a decade of experience in audio, graphic and motion design, along with various forms of business and communication, he gained experience with Entrepreneur Franchise 500, Inc 5000, and multi-continent companies, along with various charity initiatives under his belt. Dimitar Karamarinov appears on established media such as Forbes, Metro News, CMSWire,, BBN Times, and more.