Challenges Faced By Entrepreneurs In New Venture Development

Emergence of New Ventures

Question:

Discuss about the Entrepreneurial Narratives in Sustainable Venturing.

The establishment of the new venture leads towards the financial and personal rewards. The emergence of the globalization helps in adopting the innovative business procedures that determines the business success (Miller 2015). However, on the contrary, such innovative approaches in the business market are influencing the demands of the consumers as well. Mostly, the entrepreneurs face the difficulties in the market since they need to take the active participation in the competitive market against the giant organizations (Ferraro and Briody 2017). Accordingly, they even face some of the considerable challenges as well. The investment of the adequate resources and efforts is essential for developing a business. The essay would thus focus on some of these considerable challenges that have the significant impact on the new venturing process. Every business marketer seeks opportunity to create successive positioning in this competitive business market. Therefore, the study would discuss the probable challenges faced by the business marketers in time of establishing the new ventures. The study would also develop the ideas about the actions undertaken by the entrepreneurship business to maximize the likelihood of success in the start-up business process.

In current scenario, it has been observed the traditional avenues of the corporate growth are becoming less attractive due to which the new ventures are emerging in a recognizable way. The emergence of the new ventures is not an easy process for the entrepreneurs and they face enormous challenges at the initial stage (Hatten 2015). The slow to repay investment is one of the major determinants that generally occur in the new venturing process. The strategies applied to the new venturing process often facilitating the entry into new business areas with the usual technological products and innovativeness. The larger enterprises are associated with the different layers of management with a detailed control system. Moreover, these enterprises offer the special advantages of recapturing the charms of entrepreneurial energy (Foss and Klein 2015). It is even essential to concentrate on some of the beneficial factors or strategies that would help the new venture to strengthen the competitive positioning.

The first challenge is faced by the new venturing process is the enormous competition posed by the large enterprises. The fierce competition, the low barriers to entry, and the plenty of access to the capital resources are opportune enough for the ventures in maximizing profits. In spite of the enormous opportunities, the entrepreneurs usually face difficulties (Breuer 2013). It is notable that the larger enterprises usually invest more capital amount to develop the innovative technologies. The higher growth and the extensive sources are helpful enough for the larger enterprises to develop the customer base. These enterprises gather the complete knowledge about the customer demands. Even when the demands are changed, these companies can utilize the sufficient resources to fulfill the expectations or bring any innovation. However, it is quite difficult for the entrepreneurs since they have the access to the limited resources. On the other hand, the lack of the adequate experiences is also creating obstacles in terms of participating in a competitive scenario (Haigh and Hoffman 2014). The market competition is thus one of the major considerable determinants for the startup businesses.

Challenges Faced by Entrepreneurs

Another difficulty for a new venturing process is the method of obtaining financing. Sometimes, it becomes hard for the entrepreneurs to identify a fruitful financial institution that would lend money to start the business. It is thus necessary to explore the alternative solutions for financing. For example, the entrepreneurs might have to borrow money from the family members, or use the personal savings. Entrepreneurs may anticipate the difficulties in financing for the new venture due to such obstacles. According to Wales, Wiklund and McKelvie (2015), establishing a new business is equal to a roller coaster ride in which the entrepreneurs would face the ups and downs. During the lean moment, the business marketers may face the considerable challenges in investing the adequate amount of money. Moreover, they even need to develop the emotional balance to deal with such uncertain situations. It is to be notified that the establishment of a new venture is not the part time process. It is essential to invest the ample amount of time that can be beneficial in paying attention to the entire infrastructures and business needs. The proper planning within a scheduled time would lead towards successful business venture. Parida et al. (2015) suggested that having a positive team or hiring a positive team is not the only criteria for the business success. Leading the team towards the right direction is necessary for developing a new business successfully. Devoting money, resources, and time are the major components to establish a new business.

Another major issue faced by the entrepreneurs is the lack of sequential planning. A successful new venture requires proper planning that includes the necessary steps of business development. However, it is essential for the entrepreneurs to develop the fruitful strategy for the sequential execution of the business planning. Formal and structured business plan writing would be helpful in such cases (Kuratko, Hornsby and Hayton 2015). The major purpose of the effective business plan is to identify the potential challenges that the entrepreneurs may face during the transition period. Setting the limits of the business is also necessary for a successful new venture. It is notable that the new ventures often strive to retain the competitive position when it comes to the competition with the larger organizations. The lack of proper resources, time, and sequential planning may affect the entire business due to which the entrepreneurs face the considerable loss. Therefore, it is necessary for them to understand the effective strategies that can be applied to ensure the successful business plan and the strengthened business positioning in a competitive market. The further section of the study would thus reflect on the required actions to be taken into account for maximizing the likelihood of successful business venture.

Competition from Larger Enterprises

The first and foremost step for the entrepreneurs is to derive the clear ideas and information about the start-up business. Having a clear vision and objective of the business helps in understanding the right direction to drive the business and ensure profitability. Dencker and Gruber (2015) explained that the some of the entrepreneurs come up with the clear idea of the business, put together the sequential business plan, and invest the necessary capitals whereas some entrepreneurs fail to do so. However, it is necessary for the entrepreneurs to resolve the mess and develop a successful business strategy to earn more profitability. First, the entrepreneurs need to concentrate on the potential customers for the business. Identifying the potential customers would provide the ideas about knowing their basic needs and requirements. Satisfying the customer needs leads the business towards the significant growth. Knowing the requirements of the customer provides the clear vision of the business requirements (Fisher, Kotha and Lahiri 2016). There are two ways to deal with the customer demands, either to guess their needs or to communicate transparently. Communicating to the customers is the most helpful way to obtain the ideas about the specific requirements. Moreover, it would be helpful enough in recognizing the market competition in a clarified manner. Therefore, establishing the communication media is much helpful for the entrepreneur. Using the social media websites or digital communication or advertisements would be preferable in such cases. Many of the businesses even guess the preferences of the customers, which may lead the business towards failure. The volatile customer demands can only be fulfilled by communicating with them and knowing their requirements.

Second, identification of the opportunity is essential for an entrepreneur to ensure the business profits. Agafonow (2014) explained that a capable entrepreneur can visualize and exploit the opportunities, which are missed by the ordinary people. However, it is sometimes much difficult to recognize or avail the right opportunity because it stays for a limited time. Opportunity is generally the possibility of occupying any specific business market with the proper innovations that can satisfy the needs of the customers. Therefore, a successful venturing depends on the recognition of the right opportunities. The next step of a successful venturing is to evaluate the opportunities by understanding the considerable factors associated with the business process. The first factor is the product or services that are needed to be offered. It is necessary for the entrepreneurs to describe the products or the services, the differentiators, and needs to the customers (Munoz and Cohen 2017). It is also necessary to identify the competitive benefits, supports for the customers, and after sale services of the products. It would generate the ideas about the acceptability of the products in the market. The second factor is the market opportunity that would determine the market demands, target market, niche market, characteristic of the industry, and the current expectations. Identifying the demands and market opportunity is much helpful for the business entrepreneurs to understand the competitions in the market and desired distribution channel. The new venturing requires concentrating on these specific aspects, which maximize the profitability of the business development.

Difficulty in Obtaining Financing

Another factor is costing and pricing, which ensure the amount to be invested for a business or product development. Structuring a complete and adequate budget would be beneficial in such cases. The entrepreneurs usually face challenges in raising funds for the business. It is thus necessary for them to identify the relevant source to generate more funds for the business investments. The pricing and the cost structure is also necessary to be compared with the prices fixed by the competitors in the market. The availability of the skills and equipment is suggestive for the new venturing process. In current time, the advancements brought to business world have been changing the demands and expectations of the potential customers (Dunkelberg et al. 2013). The adoption of the required equipment and technologies will drive the business towards the expected direction and eventually would ensure success. The next factor is profitability, which are the identification of the money-making process and the development of gross margin. The recognition of the business return investment determines the expected profitability from the new venture. However, it is even necessary to concentrate on the cash flow patterns to maintain the flow of the expenditures. The next factor is to be considered in the evaluation process is the capital requirement for the business expenditures. It is necessary to identify the required capital for the long term process. Moreover, the new venturing discloses the ideas about the securities associated with the funds and the potential investors. The most important factor to be considered is the underlying risks and pitfalls. Every entrepreneur needs to be prepared for the loss and the risks in the business (Gherghina and Simionescu 2015). It is thus required to list up the probable risks associated with the product and services. Along with such product risks, it is even required recognizing the risks underlying in the industry based research, unreliable forecasts, and inability to grow the demands of the shrinking sales. The identification of the effective value chain process is another specific factor in the opportunity evaluation.

Monitoring the opportunity evaluation process would provide the ideas about the progress opportunity of the business. The final method of maximizing the business profit is to assess the entrepreneurial team. It is noted that in spite of the right and effective plan, the business would not be successful if it is not driven by the skilled team. The efforts and the skills of the entrepreneurial team need to ensure the proper skills to run the business. First is the technical skill, which is the perquisite since it provides the opportunities to the entrepreneurs. The next skill is the establishment of the interpersonal communication. It identifies the ability to communicate with the individuals. Communication is the most effective skills that have the direct linking with the business success. The next skill to be developed is the problem solving skills. It is identified that the new venturing process often faces the considerable challenges and uncertain situations. Coss, Dhillon and Udeh (2015) argued that the successful identification of the business opportunity and emerging problems help the entrepreneurs to ensure the critical success factors. The fierce competition, the low barriers to entry, and the plenty of access to the capital resources are opportune enough for the ventures in maximizing profits. In spite of the enormous opportunities, the entrepreneurs usually face difficulties. It is notable that the larger enterprises usually invest more capital amount to develop the innovative technologies. The higher growth and the extensive sources are helpful enough for the larger enterprises to develop the customer base. These enterprises gather the complete knowledge about the customer demands. The successful entrepreneurs keep the focus on such emerging challenges to ensure the necessary implication for the business process.

Lack of Sequential Planning

The next skill is the motivation, which drives the business towards right direction. Establishment of the personal motivation is necessary of the entrepreneurs to look beyond the profits and successive implications. The systematic scanning and spotting the market opportunity would motivate the business marketers (Gherghina and Simionescu 2015). Moreover, the skilled entrepreneurs need to be adaptive towards change. The entrepreneurs have the greater opportunity to develop the successful business venture if they are adaptive towards the continuous change in the volatile business market. In addition to this, acquiring the effective time management skills is necessary to structure the entire business plan. Gathering ideas about the entire financial management would help in calculating the considerable profits and loss. The creative mind in the business facilitates the better business ideas and successful business opportunities for the long run. Considering these major factors would maximize the likelihood of the business success in a significant manner.

Conclusion

The study highlights the probable challenges that the entrepreneurs usually face during the new venturing process. The market competition has been increasing due to which the demands of the business market have drastically changed. The entrepreneurs need to concentrate on the potential customers for the business. Identifying the potential customers would provide the ideas about knowing their basic needs and requirements. Satisfying the customer needs leads the business towards the significant growth. Knowing the requirements of the customer provides the clear vision of the business requirements. Mostly, the entrepreneurs face the difficulties in the market since they need to take the active participation in the competitive market against the giant organizations. Accordingly, they even face some of the considerable challenges as well. The investment of the adequate resources and efforts is essential for developing a business. Every entrepreneur needs to be prepared for the loss and the risks in the business. It is thus required to list up the probable risks associated with the product and services. During the lean moment, the business marketers may face the considerable challenges in investing the adequate amount of money. Moreover, they even need to develop the emotional balance to deal with such uncertain situations. It is to be notified that the establishment of a new venture is not the part time process. It is essential to invest the ample amount of time that can be beneficial in paying attention to the entire infrastructures and business needs.  Enhancing the proper entrepreneurial skills would be beneficial in maximizing the profit level of the new venture.

Maximizing Likelihood of Success

References

Agafonow, A., 2014. Toward a positive theory of social entrepreneurship. On maximizing versus satisficing value capture. Journal of Business Ethics, 125(4), pp.709-713.

Becker, A., Knyphausen–Aufseß, D.Z. and Brem, A., 2015. Beyond traditional developmental models: a fresh perspective on entrepreneurial new venture creation. International Journal of Entrepreneurial Venturing, 7(2), pp.152-172.

Breuer, H., 2013. Lean venturing: Learning to create new business through exploration, elaboration, evaluation, experimentation, and evolution. International Journal of Innovation Management, 17(03), p.1340013.

Coss, D.L., Dhillon, G. and Udeh, I., 2015. Strategic Planning Objectives for Venture Capitalist Investments in Emerging Information Technologies: A Value-focused Perspective. The Journal of Entrepreneurial Finance, 17(1), p.27.

Dencker, J.C. and Gruber, M., 2015. The effects of opportunities and founder experience on new firm performance. Strategic Management Journal, 36(7), pp.1035-1052.

Dunkelberg, W., Moore, C., Scott, J. and Stull, W., 2013. Do entrepreneurial goals matter? Resource allocation in new owner-managed firms. Journal of Business Venturing, 28(2), pp.225-240.

Ferraro, G.P. and Briody, E.K., 2017. The cultural dimension of global business. Taylor & Francis.

Fisher, G., Kotha, S. and Lahiri, A., 2016. Changing with the times: An integrated view of identity, legitimacy, and new venture life cycles. Academy of Management Review, 41(3), pp.383-409.

Foss, N.J. and Klein, P.G., 2015. Introduction to a forum on the judgment-based approach to entrepreneurship: accomplishments, challenges, new directions. Journal of Institutional Economics, 11(3), pp.585-599.

Gherghina, S.C. and Simionescu, L.N., 2015. Does entrepreneurship and corporate social responsibility act as catalyst towards firm performance and brand value?. International Journal of Economics and Finance, 7(4), p.23.

Haigh, N. and Hoffman, A.J., 2014. The new heretics: Hybrid organizations and the challenges they present to corporate sustainability. Organization & Environment, 27(3), pp.223-241.

Hatten, T.S., 2015. Small business management: Entrepreneurship and beyond. Nelson Education.

Kuratko, D.F., Hornsby, J.S. and Hayton, J., 2015. Corporate entrepreneurship: the innovative challenge for a new global economic reality. Small Business Economics, 45(2), pp.245-253.

Lumpkin, G.T., Moss, T.W., Gras, D.M., Kato, S. and Amezcua, A.S., 2013. Entrepreneurial processes in social contexts: how are they different, if at all?. Small Business Economics, 40(3), pp.761-783.

Mesquita, L.F., 2016. Location and the Global Advantage of Firms. Global Strategy Journal, 6(1), pp.3-12.

Miller, D., 2015. A downside to the entrepreneurial personality?. Entrepreneurship Theory and Practice, 39(1), pp.1-8.

Munoz, P. and Cohen, B., 2017. Entrepreneurial Narratives in Sustainable Venturing: Beyond People, Profit and Planet. Journal of Small Business Management.

Parida, V., Sjödin, D.R., Lenka, S. and Wincent, J., 2015. Developing global service innovation capabilities: How global manufacturers address the challenges of market heterogeneity. Research-Technology Management, 58(5), pp.35-44.

Wales, W., Wiklund, J. and McKelvie, A., 2015. What about new entry? Examining the theorized role of new entry in the entrepreneurial orientation–performance relationship. International Small Business Journal, 33(4), pp.351-373.

Wang, T., Thornhill, S. and De Castro, J.O., 2017. Entrepreneurial orientation, legitimation, and new venture performance. Strategic Entrepreneurship Journal.