Entrepreneurs are facing an ever-growing and intricate web of challenges today. This is particularly because most enterprises are operating in an ultra-competitive world. Luckily, entrepreneurs have more resources than ever before to deal with these myriad challenges. Although enterprises cannot avoid them due to the uncertainty of business landscapes, they can respond swiftly without wasting time and resources.
Well, read along to know why each of them exists.
- Cash Flow Management Problems
Cash flow is considered crucial for a business’s survival, yet many entrepreneurs struggle to pay their bills, leave alone themselves. A global study of the state of small business cash flows revealed that small businesses struggle with four cash flow management problems. These included managing payments, managing receivables, getting capital, and employee management. While the cash flow problem represents a unique issue for businesses at every turn of their operations, meeting with an accounting professional or financial advisor may help entrepreneurs sort out these concerns.
2. Budgeting Problems
From maintaining product relevance to managing employees, entrepreneurs face countless problems regularly. Budgeting problems, however, tend to loom the largest. Not only are business finances a crucial and ever-changing entity, but they are also the engine that fuels the company’s operations and activities. A good budgetary position may cause the business to thrive, while too many budgetary problems may cause the most pristine and efficient machines to stall out. The four leading budgetary problems faced by entrepreneurs today include sticking to a budget, lack of cash flow, marketing, and lack of capital.
Managers and entrepreneurs face a mounting challenge managing employees of different cultures, ages, races, and backgrounds. Some of the most common employee management problems include low-performance levels, lack of communication, understaffing, and poor work teams. The pressure to perform, time management, and the absence of a formal structure are other challenges ailing enterprises.
According to documented evidence, the most difficult part of managing employees includes firing an underperforming staff, handling conflict, and supporting a grieving employee. Besides, enterprises report that persuading an excellent employee to stay and dealing with dishonesty are pressing challenges.
4. Time Management
Are you an entrepreneur? Do you have a business you have owned for years? Many entrepreneurs find their biggest challenge is time management. Entrepreneurs work seven days a week, endless hours, and even when on holidays and vacations. Working countless hours is the price they pay for success, independence, and being their bosses.
So, how can you solve this challenge?
The Entrepreneur details some suggestions that can make a difference. First, decide what is important every day — and to do this — consider one thing that you do that brings you closer to generating the most revenue. While posting on social media can be an important undertaking, writing a business plan can prove more significant in the long term.
The second thing entrepreneurs can do to solve the problem of time management is to control disruptions. By far, the biggest challenge is being interrupted easily, and to be frank, they allow it! Finally, dealing with time management simply involves blocking time off. This can be done by taking your calendar, electronic or paper, picking dates, and blocking off some dates to have a day off. As an entrepreneur, if you do not make a plan and block off time, you will never have time off. Ever. You will work all day because it’s in you.
5. Decentralized Finance
Decentralized finance is a system where software deployed in a blockchain makes it possible for lenders, buyers, and sellers to interact with a strictly software-based or a peer-to-peer intermediary rather than an institution or a company facilitating the transaction. In this system, financial services and resources are available in decentralized blockchain architecture, making them accessible and open to everyone in the chain rather than going through intermediaries like banks and financial institutions.
Decentralized finance has generated insurmountable problems for entrepreneurs, and particularly the traditional banking institutions and agencies. The most pressing problem is the loss of control, also known as decentralization. Too much decentralization has led to the loss of control of financial information, assets, and resources from the hands of the top management. This simply implies that banks and financial institutions are losing the power to own, monitor, and control consumer financial information like transaction records, financial trends, and income patterns.
Challenges Facing the Decentralized Finance
Decentralized finance is the next new frontier, particularly with a growing emphasis on cryptocurrencies: Bitcoinand Ethereum. The growth of blockchain technology as a decentralized, immutable, and shared platform presents new realities for individual consumers and businesses. The programmability feature of decentralized finance means that smart contracts can automate transactions and executions; this enables the creation of digital assets and financial instruments. Decentralized finance is also interoperable, immutable, and transparent.
Challenges Facing Entrepreneurs of Decentralized Finance
While blockchain use in the monetary system has evolved with new technologies, entrepreneurs find new challenges leaping into this new frontier. Below we detail the top-ranking challenges facing entrepreneurs of decentralized finance.
- Hacking of Smart Contracts — Decentralized finance platforms depend on smart contracts that run on ethereum. The program code is usually public, and anyone with in-depth technical knowledge can examine and interact with it. That means that blockchain architecture and networks that run on smart contracts are attractive to hackers.
- Ethereum Non-Scalability — Decentralized finance is essentially a sector based on ethereum. Liquidity and innovation focus on ethereum, and therefore, there is the development of new projects that attempt to lure new users with effective and token assortment management. Although there is little on the front-end, ethereum does the heavy lifting on the back-end. As a result of the challenges facing its scalability, ethereum either becomes too expensive or fails.
- Stablecoin Failure — Maker started operations in 2014 as an Ethereum project. In 2017, Maker initiated the Stablecoin DAI that pegs to the US dollar. Anybody can use ETH, BAT, and USDC as security to create DAI while maintaining a ratio of 1 to 5 to 1 and 1 for the USDC. DAI is perhaps the most extensively used stable coin in decentralized finance. In case the smart contract is hacked, and the hacker accesses the user’s security, the DAI becomes worthless. That means that such a move will disorient the decentralized finance sector. As a result, entrepreneurs of decentralized finance are forever cognizant and vigilant of new threats in smart contracts.
- Accessibility of User’s Tokens — In a decentralized finance architecture, tokens are usually under the management of smart contracts. Decentralized finance is a non-custodial finance system contrary to the traditional one that was controlled by humans. As a result, custodial services call for heavy security and management. However, when the system is non-custodial, it can be accessed by everyone hence presenting a risk of unauthorized access. Lack of transparency on any administrative practice in the blockchain can easily result in access to users’ tokens hence leading to a serious compromise and breach.
It is crucial to establish that although most enterprises have leapfrogged in terms of technology usage and internet application, there is little corporate awareness of decentralized finance. Few entrepreneurs know about it, which affects its use rates. Besides, the fact that it is still at its nascent stages implies there are relatively more risks involved in the deployment and use. Therefore, as decentralized finance becomes the norm, it makes more sense for entrepreneurs to remain cognizant of these new challenges.