Are you an entrepreneur, investor, entrepreneurship student, enterprise consultant, business educator, regulator, entrepreneurial policy advocate and developer? If your answer is yes then this subject may be of interest to you. What really are the common entrepreneurial problems? Certainly one can come out with a long list. However, some of the problems tend to be minor and also differ with factors such as geographical locations, the nature of business, the level of investment and several other factors. Nevertheless there are common problems that seem to cut across the board. These have been highlighted below.
I. Knowledge and skills deficiency. Most entrepreneurs lack proper knowledge and skills in enterprise management. This deficiency encompasses various aspects of business management. Leadership and managerial limitations fall under this category. Lack of costing knowledge for example, can cause underpricing. Poor understanding of costs of operation may lead to budget deficits and operational challenges. Poor people skills may mean high staff turnover. Bad procurement skills may make your enterprise lose valuable time and money. Poor market research may affect business feasibility. These deficiencies also generate some of the problems indicated below indirectly including inability to learn from mistakes and setbacks. Poor decision-making and implementation result from these drawbacks.
II. Planning and organizational problems. These include lack of strategies, plans, organized systems etc. Processes, procedures, policies are non-existent or are disorganized. Operations may be done haphazardly. This also negatively affects growth and expansion of the business. Lack of record keeping is also organizational. Planning problems also manifest in inability to manage change, such as changing too slowly, failure to consolidate change, etc. Poor accountability, lack of process standardization etc also arise from the above.
III. People problems including hiring incapable staffs such as friends and relatives, hiring the wrong people, inability to attract and retain skilled manpower due to financial and other limitations, inability to place key people in critical positions, difficulty in building teams, hesitation by potential staffs, and others. Reluctance to train and develop staffs also falls under this.
IV. Attitudinal problems such as the craving to do everything without delegation, resulting in burnout, are common. You may also micromanage. Closely connected to this is entrepreneur’s dilemma – the inability to let go because you started the whole thing and feel no other person can take over. The know-it-all attitude may also exist, where you don’t consult, share experience etc. You don’t see value in using experts such as consultants, mentors and coaches. These problems also hinder the entrepreneur from handing over the enterprise to a team of people to manage on his behalf. The enterprise thus remains dependent on the initiator for too long.
V. Money related problems comprising under-capitalization of the enterprise, inability to access funds from other sources, financial indiscipline hence mismanagement of cash, and lack of financial intelligence are common. Additionally, some entrepreneurs are greedy and are too much in a hurry to make money. This is manifested through quick-fix approaches to making money, lack of patience, cheating people and the like.
VI. Personality problems, additional to the attitudinal ones mentioned above, are also common in entrepreneurs. These comprise negative thoughts, too much hence disorganizing fears of uncertainties and failure, lack of self-control, hopelessness, inability to detect and avoid bad advice, lack of critical and analytical thinking, poor stress management, false comfort, taking long but scenic routes to success and being dazed by too many opportunities. Indecision, procrastination and lack of focus also occur. Some entrepreneurs also have the luck mentality and make big business gambles. With false comfort, for example, an entrepreneur may think that if he attains a certain level of sales or profits then his problems are over.
VII. Ethical and regulatory problems. These include challenges in complying with required statutory and regulatory matters, unethical practices by the entrepreneur, reluctance to comply, lack of regulatory and government support etc.
VIII. Poor succession planning is also a major problem with many entrepreneurs. This explains why many enterprises perish after the demise of their originators.
Some startups may also have problems such as poor business model, product quality problems at time of market entry, and other similar challenges. It is important to note here that different stages of an enterprise manifest different problems. The listing of common entrepreneurial problems therefore cannot be complete. I do hope I have provided a good guide, haven’t I?
In subsequent articles we shall be tackling how to overcome some of the above problems.
Should you desire to sharpen your skills in enterprise management, check out Clayton’s book entitled The Wise Entrepreneur at Amazon.