6 Challenges All New Business Owners Face In Year 1
Starting a new business is an exciting and rewarding experience, but it’s also inevitably filled with challenges. I set up my marketing agency in March 2021 after I quit my corporate Head of Marketing role and I was completely oblivious to some of the biggest challenges (this was probably a good thing otherwise I wouldn’t have done it!). Here are some of the biggest challenges that a new business may face in its first year:
One of the biggest challenges for a new business is often securing the necessary financing to get off the ground. This can involve everything from finding investors to taking out loans. Financing is much more of a challenge if you have a product-based business rather than a service-based business because you have much larger overheads from the outset. Before you hand in your notice and set up your business, make sure you have a financial plan in place so you can still pay your rent or mortgage, bills and can still afford to eat even without income from your business.
In order for a new business to succeed, it’s important to get the word out about what you do and how you do it. This can be challenging, especially for businesses on a tight budget. The cheapest ways for you to start getting the word out there are networking and social media. But make sure you know where your potential customers are before you waste time on doing marketing that doesn’t get you results.
Managing cash flow
Proper cash flow management is crucial for the success of any business, but it can be especially difficult for new businesses that may not yet have a steady stream of income. This has been the hardest lesson I’ve learned in business so far. Cash is king and as the business owner, it’s your responsibility to make sure you have enough cash available to pay not only yourself, but your suppliers, staff, taxes and other business running costs like insurance and subscriptions.
Hiring and retaining talent
Finding the right employees is essential for your business, and this can be especially challenging for new businesses that may not yet have a reputation in the industry. Retaining top talent is also important, as high employee turnover can be costly and disruptive. Depending on the type of business, you might not need to hire permanent employees during the first year. A lower-risk option can be to find freelancers who can support you until you’re ready to hire permanent staff and can afford employment liabilities.
In today’s fast-paced business world, it’s important for new businesses to stay competitive. This can involve everything from staying up-to-date on industry trends to continuously improving products or services. Year 1 is a great time to test the waters and see what works and what doesn’t for your business and your customers. I learned a lot about our pricing, ideal customer profile and the services that people really needed from us in the first year. This was the year I expanded our service offering from marketing consulting to include marketing implementation because that’s what our customers really needed our help with.
Balancing work and personal life
Starting a new business can be all-consuming, and it’s important for entrepreneurs to find a balance between their work and personal lives. This can be especially challenging in the early stages when there is so much to do. But it really is important to find a way to switch off when possible so you don’t burn out. I left my Head of Marketing job to start my own business so I could have the freedom to set my own boundaries and not make myself unwell trying to meet unrealistic expectations.
By understanding and preparing for these challenges, you can increase your chance of success in the first year and beyond as you embark on what I think is one of the most rewarding career journeys you can take!