- Financing can be a challenge for anyone. You need to cover both your living and business expenses when starting out. Therefore, you need enough capital for three to six months, depending on how long it takes you to turn a profit. Fifty percent of all businesses fail within the first five years, according to the Small Business Administration. A big reason for business failures is a lack of capital. You need to invest in your business before you even make your first dollar. You need product inventory, employees and advertising to get your business up and running. You may have enough money in savings to get started; however, new business owners often need financing. Financing a new business can be difficult. You likely need excellent credit and collateral. It also helps to have a business plan that shows when you expect to turn a profit, according to the Small Business Administration.
- Find out what licenses you need for your business. For example, you may need a seller's permit if you sell products. However, the real challenge comes for people who want to form partnerships or corporations. Find an attorney who can assist you with the paperwork. Register your partnership with your state. Corporations need to file both state and federal forms, according to the Internal Revenue Service. There are also forms to fill out when hiring employees.
Home business owners face additional challenges. Local zoning laws may restrict the customer activity at your home. For example, direct sellers may be restricted on customers picking up orders. Zoning laws can also limit the amount of inventory you store in your home. Check with your local county administration office or city hall regarding zoning laws in your area. - Whether you're the bellwether in your industry or a newcomer, you face competition when starting a business. Business clients may be reluctant to deal with a new business, especially if you lack credentials or don't have samples of your work. Businesses may only deal with companies on a referral basis or expect you to supply testimonials, or positive customer comments about your work. Therefore, start asking for testimonials and references with each project you complete. You can type testimonials up on a sheet of paper. Expect competition from your very first day. Differentiate your products and services from other competitors. For example, provide better customer service than anyone else.
- It may be difficult to retain workers when starting a business. You may not be able to pay employees salaries comparable to more established companies. Therefore, expect to have turnover. Moreover, employees in small companies have to manage a variety of different tasks. For example, a marketing manager may need to conduct his own customer surveys if there's no established market research budget. Similarly, the marketing manager may need to perform a lot of clerical tasks that an assistant would normally do. Consequently, certain managers may not like juggling lots of tasks. These managers may be used to the more structured environment of a larger company.
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