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Challenges Of Starting A New Venture

New venture management is very significant because of the role it plays in achieving the entrepreneurship dreams. It is the action stage of the entrepreneurial activity. As the entrepreneur identifies opportunities and plans towards exploiting them, the new venture established serves as a tool towards achieving those entrepreneurial goals.

Challenges Of Starting A New Venture

In many countries around the world today, entrepreneurship is the major source of employment and revenue generation for government while in the more developed countries, it serves as a source of innovation; however these entrepreneurial goals will not be achieved without the establishment and effective management of new ventures.

Many new ventures today find it difficult to survive and stand the test of time mainly because of some challenges faced by new ventures and these challenges are usually associated to the dynamism of the business environment especially in developing countries.

One key to survival of new ventures is the effective management of startup business, conception of ideas and implementation of the entrepreneur’s business idea.

Challenges Of Starting A New Venture

Every new venture faces certain challenges,and it is how these challenges are handled that makes the difference between successful ventures and failed ventures. Some of the likely challenges of starting a new venture include:

1.) The product is behind schedule

Because of technological advancement, products do not take long time before they go absolvent in today’ s market, technology which has been described as a creative destroyer presents equally a big challenge to a new venture manager just as it presents opportunities.

Technological innovation makes previous
models of a product obsolete especially when there is annual upgrading of the said product like software.

2.) Sales are not meeting projection

A new venture may set certain number of sales as
its estimated sales over a period usually over its first year or first quarter of the year.

This projection may not be met by the new venture within stipulated time frame. This is usually because many entrepreneurs do not dream of the fact that customers may be slow in
accepting new ideas of products that are unproven when there are other older brands.

Most entrepreneurs expect customers to leap tall buildings to get to their product and when this doesn t happen it becomes a big problem which if unprepared may discourage an
entrepreneur from achieving his/her dream of building a big venture.

3.) The team not gelling together

When new venture is based on team work and
Somehow the team is finding it difficult to stay together, it presents a bid challenge to the new venture. Partners here may not be confident with ideas coming from each other.

They don’t trust anyone here but themselves, harmonizing this team could be a key determinant of failure or success of the business.

See Also: Common Reasons Why People Buy Products And Services

4.) Cash flow problems

Every business venture takes money to set up and the unavailability of this resources especially mid way to the investment process is a great challenge the entrepreneur has to deal with.

These challenges are not peculiar to a particular venture they are challenges mostly faced by
every new venture and when these challenges are properly managed and surmounted they
make the difference between successful and unsuccessful ventures.

GROWTH STRATEGIES FOR BUSINESSES

The pressures from major stakeholders have always created “growth dilemma for business
enterprises. Some of these stakeholders include:

Shareholders or, in a small-to-medium enterprise (SME), the owners. Shareholders hope that growth means increased wealth.

Customers – their demand for products or services forces enterprises or companies to
keep expanding, not necessarily profitably; Employees (particularly, management) – Employees gain from growth through enhanced carcer prospects, promotion. Salary increases. bonus, etc.

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However, it has to be emphasized that growth is a natural phenomenon, both for
individuals and organizations. Everybody desires growth.

Growth of business enterprises, apart from the self-serving interests of the major stakeholders is beneficial to the society – more employment opportunities, more products and services, increased taxes, more money for corporate social responsibilities, improved contribution to the nation’s GDP, etc.

Corporate growth strategy is intended to gain larger market share, or becoming a market leader or having long-term competitive advantage over rivals.

There are many growth strategies available to business enterprises. Some of which are:

  • Expanding Existing Business: This may include – increase product lines, hire more workers, buy more plants, or expanding operators generally.
  • Diversification: This may entail entering into new industry or industries. In this case, the enterprise may be a new comer. Without careful plan, or a good marketing research, could be risky.
  • Forming Strategic Alliances (or leveraging partnerships): This is an arrangement between a number of business enterprises, each contributing and benefiting from the alliance or partnership.
  • Acquisition: This takes place when a bih business acquires other smaller enterprises to become even bigger in the same industry or related industry. Continous acquisitions in a particular industry can help a company to be a leader in that particular industry.
  • Market Penetration: This takes place when a small company decides to market existing products within the same market it has been using. For example, in markets where there is little differentiation among products, a lower price may help a company increase its share of the market.
  • Market Segmentation: This implies selecting a sub-set of the whole marketplace that a company can organise its sales efforts on or around. In other words, an enterprise needs to focus on a group of core customers to serve and satisfy- pupils, students, the aged, unmarried ladies, etc.

It is important for entrepreneurs and enterprises to take note of factors inhibiting high growth. These have been identified as some of the factors and they are summarised as thus:

  1. The business has no sufficient cash required for growth
  2. There is no stated vision to promote growth.
  3. The marketplace is not well studied or understood
  4. The sales volume is low, or the customers are few in number to support the desired growth
  5. There are too few people selling or salesmen are not motivated.
  6. The whole enterprise relies upon one person- man or woman
  7. The use of effective IT in the business is low
  8. The experience of the employees is low
  9. The directors/top managers have not undertaken financial training
  10. There is no formal planning process in place.

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