By Tyler Gallagher, CEO and founder of Regal Assets, an international alternative assets firm with offices in Beverly Hills, Toronto, London and Dubai.
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Entrepreneurs face various challenges going into 2022; some are external to their profession, others intrinsic. As an entrepreneur myself in various sectors from entertainment to investing services, I can attest to some of these challenges firsthand. I’m going to have a look at these challenges and how they might affect American entrepreneurs in the year ahead.
External Factors
Possibly the greatest challenges you will face as you enter 2022, and throughout the year, come from external factors. These are not things you may always be able to control, nor may you have a solution for them.
However, it’s important to be aware of them, so you will perhaps be able to thwart the worst consequences. Intrinsic challenges are always present; we’ll look at these in light of what 2022 has to bring.
• Inflation. December 2021 saw inflation reach 7% for the first time in decades. As the economy started to kick back into top gear, high demand for products put excessive pressure on prices. Aggravating this situation are soaring energy costs.
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Inflation is a particular worry when you hold large amounts of cash. The value of your money is being eroded as it simply sits in a checking account. Meanwhile, the goods or materials you require for your production needs only get more expensive.
To limit the negative effects of inflation you can try to keep your cash fund as low as possible. You can stock up now on supplies you’ll need further down the road, for example. Or, if you were thinking of investing in improvements for your business, now might be a better time than later down the road.
• Labor Shortage. The Bureau of Labor Statistics noted 4.3 million people left their jobs in November, up 370,000 from the previous month. The labor shortage is beginning to be relevant to a lot of businesses. Depending on the type of industry you are in, there may be alternative channels you can search for employees.
Depending on the types of jobs you need doing, there is an increasingly large presence of employers and employees who can find each other through online platforms. These platforms offer entrepreneurs and business owners the opportunity of finding freelancers who can perform a varied number of jobs online.
A couple of valid examples include Guru and Upwork. Both of these platforms charge a fee for their services. But then, what recruiting service doesn’t? What you get is a potential workforce from all over the nation and around the globe. Each freelancer is verified by the platform, and previous employers can leave reviews for further guidance.
Intrinsic Factors
These are the factors that are inherent to your profession as an entrepreneur. However, there may be some insight into how you manage each of these aspects. Let’s take a look at the most relevant for 2022.
• Cash Flow Management. A steady cash flow is essential to the survival of your business. Many entrepreneurs struggle to pay their bills, workers and rent, not to mention give themselves a steady income. The problem is mostly created by delayed payments. Often clients want to pay 30 or sometimes 60 days after receiving an invoice.
To stem this delay, you can ask to invoice every 15 days instead of monthly. This breaks down the time you wait from one payment to the next. Another option is to ask for a down payment once the contract is started.
You can also ask for payments to be made on the completion of the project — especially when the product is online, and almost for sure these customers could make a payment from their phone if they wanted to.
• Time Management. Time, like money, is a valuable asset, and just like money, you need to be very choosy on how you invest it. Many entrepreneurs have the feeling that there just aren’t enough hours in the day. The lack of time may be due to the lack of prioritizing and delegating.
Always set yourself a written list of tasks. Writing tasks down will help you put them into perspective. Then you can rewrite your list with the highest priorities at the top. Always ask yourself if what you are about to do is the most necessary, and then ask yourself if you really need to do it.
Many entrepreneurs want to get the job done themselves. As the adage goes, if you want a job done well, do it yourself. But this might not always be the case. If it is not absolutely imperative, then you should delegate. And, if you delegate more often, you’ll probably find it’s more useful than you thought.
• Funding. Funding is a problem new and established entrepreneurs both have. If you are still in the startup phase, you may be looking for an angel investor or seed funding. If you’re an established entrepreneur, you may need to cover extra expenses or cover supply costs on time.
For entrepreneurs who are developing a startup, you will be looking for angel investors or venture capital funds. Of course, everyone mentions friends and family as your viable source of funding. We know that often isn’t the case. Some online platforms that connect funders and founders, such as Funded or FundersClub, might be a better bet.
If inflation keeps rising in 2022, funding will keep getting more expensive. If you are going to use a credit line, you can improve its use by implementing a more efficient cash flow, which should save you a lot on interest payments.
Final Thoughts
Being a successful entrepreneur is possibly one of the most challenging professions out there. But in my opinion, it’s also the most satisfying, without a shadow of a doubt. But it’s not the money that’s most fulfilling; it’s the satisfaction of overcoming new and constantly emerging obstacles in creative and industrious ways.
