A company’s first year of operation is one of the most challenging times of your life. You have a great idea for a product or service, and you have an effective business model. Still, even if your venture is successful, you must face a series of challenges in order to overcome those difficulties. JD Duarte, a successful entrepreneur from Costa Rica, discusses some of the challenges that businesses face during their first year of operation and how to overcome them.
At first, the entrepreneur must take into account the concept of survival, not profitability. The income earned during the first year of a business is rarely enough to recover the initial capital. The main challenge of the first year of a business is faced on the financial side. Initially, the entrepreneur must take into account the concept of survival, not profitability.
Due to the fact that the entrepreneur is not able to extract from the company the resources needed in order to pay for bills and commitments on a daily basis, he must have a previous capital, enough for him to maintain himself without the income of his business.
It is important to make projections for working capital for three, six and twelve months. Review these projections throughout the year and compare them to the current budget to determine whether you should adjust your strategies accordingly. You need to also choose a segment of business (industry, commerce or service) and make sure to thoroughly study the market and the competition that you will be facing in order to overcome the challenges of the first year.
You need to follow some management principles in order to help your company get through the first year, such as staying true to your organization’s mission and culture, having a profitable business model, and generating income, and so on. However, if the company does not have credibility in the market, then that will not be enough to get them to the second year.
In the beginning, Duarte says, “If you are starting a new business, you must expect to face the challenge of convincing people to take you seriously, even if your business concept sounds too good to be true. We respond by first delivering what our customers want, and then we accept payment when we are confident that they are satisfied.”
There is also the challenge of reconciling the new business with the family, which can also be quite challenging. There is a good chance that the suspension of payments may seem like a trivial incident.
Still, it is a fact that one of the main reasons for the suspension is the difficulty in reconciling time for family activities with the commitment that a new business requires. Usually, it is an entrepreneur who prioritizes the family over the entrepreneur’s own interests.
You should always set aside some moments during the week to dedicate yourself to the activities that will make everyone feel happy so that you do not end up in this situation again and again. To avoid this problem, make your family aware of the difficulties that will come.
Setting up a new project brings economic, commercial, operational, tax and innovation challenges. Identifying and handling these challenges properly make the difference between those who are successful in consolidating their business, and those who are not able to pass the first years of operation.
During the pandemic, people considered starting their own business as a means of generating financial resources due to business instability. This prompted them to consider the possibility of creating their own business. In order for the project to progress smoothly in its various phases, the first thing they need to have is a well-structured and robust business plan.
It is very important to identify the characteristics that determine a business’s probability of success, such as the value proposition, the cost of production, and the materials and equipment needed. When one first starts a business, he or she often makes the mistake of not being very clear about what they intend to offer the market and what they will be offering. This is one of the most recurrent mistakes people make.
To start, set up and develop a business entails a considerable financial investment. To start, set up and develop a business means investing a considerable amount of money. The lack of capital restricts some decisions, so you have to be very careful in how to prioritize expenses.
The ventures, during the first years of their existence, are exposed to certain credit restrictions. The banks are conservative when it comes to granting loans, so it is possible to raise funds in other ways, such as private equity funds, so it can be an alternative to raise funds in other ways, such as private equity funds.