Let us face it, ow is the age when startups are exploding everywhere. The enthusiasm brought by motivated entrepreneurs is a force to consider. These people are leaving no chance to prove their importance in this thriving culture of technology and innovation. One important thing which is inspiring during this time of entrepreneurship is that these individuals have challenged the pedigree of overarching domination of an established business. While many of these startups make a significant presence in the world, others disappear. This is mainly because they are not able to cope up with the challenges faced by startups when they plan to start a startup.
“Survival of the fittest” is the proverb, which is not just for humans, but for startups too. We have seen that the road ahead for startups is not a smooth one. It is important for them to execute their startup ideas in a way that brings both money and merit. This brings us to the question, “Why do startups fail in the first place?” A part of the reason behind this is high-risk propositions being associated with startups where strategy implementation and execution failures are the triggers. Here, we will discuss some of the common challenges faced by startups and their solutions.
List of Challenges Faced by Startups
- Finance- Let us get right into it: Yes, you require money to start a business. Unless you are extremely lucky and the money flows in straight away, either from investors or sales, money is going to a problem sooner or later. And when money flow problems hit a startup business plan, they can be difficult, delaying significant progress like rolling out the products, hiring important staff, or fitting new offices. You will require capital for funding software or product development, marketing, office space, and much more. Most of your success will flow from the investment that you do initially. As the income increases, expenditures also rise and to top it all, startups depend on investors who offer financial support. When such situations come, startups are the first ones who lose on managing money, and finally succumb to the pressure.
Solution- As a rule, startups must always find ways of lessening their costs. Invoice factoring is another method of fastening the account receivable procedures in startups. In this digital age, when invoice payments are made with the help of mobile phones, there is no harm in requesting immediate payments from the customers. It is also important to secure money before any business needs it as they can find out how much money they will need to survive. Ultimately, using accounting software to keep a track on money coming in and out is a good idea.
- Neglecting sales and marketing- Are you putting enough into sales and marketing? Some of the start-ups believe that they can ignore these two functions totally and hope that the word of mouth will be enough. Or if they are a SaaS company, they might believe that sales will expand organically online and that the IRL sales and marketing teams are not required. However, it is a false economy to put your trust in clients identifying you unless you make a determined effort in order to grow them with a right structured plan in order to promote your startup. It’s money well spent. And when you are building your sales and marketing functions from ground zero, take the chance to make them as integrated and aligned as possible from the get-go.
Solution- Today’s digital world has opened a wide spectrum of avenues for marketing in the form of print, electronic, mobile, video, and online advertising. Startups need to be adept at developing innovative marketing plans, placing ads, and allow people know the importance of their products and services. To put it in a simple way, a good marketing strategy has a vision, mission, and business objectives. It should be able to define the position and role of a business’s products and services in the market. Right marketing strategy fundamentally entails efficiency with which consumers are approached and encouraged their future loyalty towards a product or service. Technology giant, Apple Inc is successful due to its unique marketing strategy that makes its products sensitive and user-friendly. Steve Jobs has the idea that people will not use Apple’s products, they will experience them.
- No planning- It is surprising to see that so many start-ups fail because they do not plan in the right way. Or maybe they did the planning, but they were not able to cover all bases. Important areas like staffing, sales, development, skills shortage, funding, and staffing are not afterthoughts. They must all be a part of your business plan right from the initial stage. Not only this, but you should plan for the things you cannot plan for, too. That is, even if you cannot prepare for each eventuality, you must know what you are going to do when unexpected things turn up. If your business plan is all optimism and fails to allow for any kind of surprises, then big trouble is waiting for you. As the saying goes, “if you fail to prepare, prepare to fail.” So, it is better not to leave things for later.
Before launching a business, it is important for startups to do a thorough research by investigating from suppliers to taxes and competitor prices. This approach is the base for a successful startup business, which needs to be viewed in a holistic manner so that the vision of the product matches with the target audience. Writing effective business plan helps startups to explain what their business is, the market it is serving, how it will conduct the operations, and the money it will earn and spend.
- Finding the right staff- Certain skill is important not only for the business to survive but also required for its growth, Knowing the exact skills you require- and how to attain those important people on board might be the most important factor in how well your startup thrives. Delay in finding the right staff is expensive. For a small team, the recruitment procedure eats up most of the time that could be spent on other business areas, but on the contrary, not having the right individuals can create many bottlenecks and stall the rollout of new items and services. These are hold-ups that no startup can pay for, mainly in the initial days.
Solution- A dedicated team with a diverse skill is important for the startups to grow. There should be a right synergy, communication, and coordination among the team members. A team is formed by people having different capabilities with one focus. This arrangement allows the members to learn from each other, help each other, and put a joined effort to attain success. Dedication and diversity of a team drives innovation.
- Fierce competition- One of the common challenges faced by startups is fierce competition. In fact, it is the most inevitable challenge that startups face. Generally, startups must bear the brunt of facing a two-way challenge: first, coming from monopolistic businesses that have rules the market and making it hard for the newcomers to come out.Second, there are large numbers of startups with innovative ideas that are launched every now and then, so there are high chances of getting invisible by the shadow of other successful startups.
Solution- The best thing of competition is that it forces businesses to come out at their best. In fact, there is a lot of opportunity for entrepreneurs as switching costs for most customers are low and many are willing to try new and untested products and services. To overcome the fierce competition, startups must research and evaluate their niche industry. They should follow a unique and different approach.
The challenges faced by startups are inevitable as far as the success of a startup is concerned. They must be resilient and focused towards keeping their values as it is no matter what the situation is. Therefore, foresee the pitfalls and difficulties prior.