Every startup faces challenges before they can secure their place in the market. There are many obstacles associated with starting a business and others that come with running it and making it profitable. A research on startup failure outlines that a lot of businesses begin with great prospects, but an alarming 90% never make it past the three-year mark because they don’t have the tenacity or knowledge of how to overcome the challenges they find themselves grappling with.
Starting and growing a successful startup requires a lot of time, effort, money, and energy. Even with great funding, an entrepreneur needs to have the determination and persistence to lead the business through hard times. Knowing what to expect can help you prepare for difficult times and have solutions ready for when trouble occurs.
Here are some of the most common startup problems with market-tested solutions proven to help overcome the hurdles.
1. Lack of Funding
Money—the bane of every entrepreneur’s business life. It is difficult to obtain funding to start or expand your business, and once you get funding, there’s the responsibility of making sure there is enough to go around. Every aspect of the business will require financial attention, but there are times there will not be enough to address all business needs.
OfficeEvolution founder and CEO Mark Hemmeter recommends implementing short term solutions to cut costs. Startup entrepreneurs can look into solutions like sharing office spaces, hiring freelance workers, and making purchases according to their current budget, not the initial plan of what they thought they needed for the business.
2. Misunderstanding the Market
There are new products popping into the market daily. There are a host of new mobile applications to do virtually anything, websites offering a variety of services, and physical products for even the most menial tasks like slicing an apple. It is easier than ever to start a business.
While it’s great to see more people go into entrepreneurship, not every business idea has a sufficient market willing to spend money on that idea. Overestimating the size of a potential market and the need for a product can hinder a business from getting off the ground.
Entrepreneurs can find themselves with a great product or service that consumers are not interested in. It could mean that the product did not solve a problem in the market. It is a good thing to have, but not a necessity people are willing to spend money on.
You must clearly understand the market needs and focus on products and services that solve a problem or fill a need in a consumer’s life. Analyze your product and think critically about it. Come to an honest conclusion, even if it is not favorable. This will save your company from investing in a product that won’t generate sales.
3. Trying to Do Everything
Because funds are so tight, most startup entrepreneurs try to be jack-of-all trades. They want to manage the finances, make sales, do the marketing, implement technology—all at the same time. This means they can’t dedicate time to a certain part of the business without neglecting another. On top of that, no one is an expert in everything, so their company ends up with mediocre effort in most parts.
Specialization is the key driver of innovation and efficiency, so it very important that you hire dedicated, knowledgeable and experienced professionals in respective areas of your business to achieve maximum results. When you have the right people performing duties in line with their expertise, they can perform to their full potential, which is important for your startup.
Typically, when a startup enters a market, they face competition from big companies trading in the same niche as theirs. These companies would have established themselves in those markets and probably have deeper pockets. It is easy to get swallowed by their shadow as a new startup.
You can avoid this competition by buying a franchise from the big companies in your niche. A franchise offers you direct access to information that the brand has developed over the years as they established themselves. You also get a large, existing customer base, which gives you a higher chance for success than if you do it on your own.
5. Poor Planning
At lot of entrepreneurs get excited about getting their business off the ground. They will launch half-baked products and services into the market assuming that the faster they start operating, the faster they can make profit.
Before launching your business, it is imperative that you do thorough research. Investigate everything, from suppliers to taxes to competitor prices. A slight change in market trends can cause major effects to your business. Take extra time to study market trends and forecasts for your niche. Create a comprehensive business plan that addresses unexpected changes like price increases for raw materials or the introduction of new taxes.
Every entrepreneur will encounter problems when building their startup. It is wise to anticipate the difficulties you will encounter so that you can find intelligent ways to avoid them or be ready with solutions if you encounter them.