Blockchain technology is becoming more and more prevalent these days. Originally created by Satoshi Makamoto for the popular digital currency Bitcoin, blockchain technology has now evolved into something more useful and therefore more valuable for tech users.
Despite the prevalence of blockchain, not all businesses are open to the idea of blockchain. Since it's a decentralized system with no authoritative body overseeing it, many still have doubts about how safe this new technology is.
If you're really interested in incorporating blockchain into your business, here are five challenges that blockchain entrepreneurs need to overcome to run a successful business.
1. Creating a new business model
The term "business model" refers to the company's overall structure in creating a profitable business, which includes the company's purpose, goals and detailed plans. Some business models are as simple as creating a profitable product and selling it to interested customers. Others are more complex, such as ordering products from wholesalers, implementing guidelines for inventory, creating an online catalog, processing orders, and shipping domestically or internationally. Many companies make use of a combination of various business models to ensure a successful business.
Traditional business models didn't have blockchain, and very few modern business models have provisions for it. Due to the ever-changing regulations on blockchain technology, you must overhaul your business model or even create an entirely new one to remain legally compliant at all times. Unfortunately, this can be rather difficult, especially for a startup company that has neither the manpower nor the funds. But if you want to avoid all the hassles and potential legal repercussions that may arise in the future, it's still much better to create a new business model from scratch. This means rethinking all the elements of the business model, especially your channels, revenue streams, key resources and cost structure.
2. Integrating blockchain
Startups tend to have a hard time integrating blockchain into their existing businesses. Blockchain requires special care, which is why business owners need to be creative with their innovations. Preferably, business owners who are planning to integrate blockchain into their systems should also be knowledgeable about blockchain themselves, to avoid or hopefully circumvent any problem that may arise along the way.
3. Finding talented people
Business owners aren't the only people in the company who should be knowledgeable about blockchain. Even the employees themselves must learn something about blockchain.
Unfortunately, finding people who are talented and knowledgeable in blockchain is difficult, despite the increasing relevance of such technology. Additional training and mentoring for employees, especially for blockchain basics such as cryptoeconomics and cryptographic mathematics, are imperative before fully implementing blockchain inside the company.
4. Getting the proper funding
Blockchain-based businesses tend to have a more difficult time getting funding due to their nature. Investors usually think twice before investing in these startups due to all the risks associated with blockchain.
To get funding, blockchain entrepreneurs should specifically look for investors who are open to blockchain in the first place, especially those who already belong to the industry. Another way is to look for a trusted connection who can introduce your company to investors and explain to them why your company is a good investment. The best connection would be another individual or company your target investor has invested in before, preferably one that is also profitable. The more successful your connection is, the better chance you have of getting funded.
5. Wrongly evaluating the business
Many blockchain entrepreneurs encounter the difficulties of properly evaluating their startup. When you're first starting out, it's only natural to be optimistic about your company's future returns and profits.
The problem begins when your estimated profits don't match the expectations of your investors. This can lead to investors pulling out their funding or losing their trust in your business. To avoid this, make sure that you do a proper calculation of your future profits before giving an estimation of your company's value.
If you want to implement blockchain technology into your business, remember to prepare well beforehand to successfully overcome these challenges. Blockchain may be fairly new technology, but it could easily find its place in your newest venture.