Thousands of startups are founded on a daily basis, but only a handful of them get converted into successful business entities.
By Smith Willas
As many people love to call it the hottest contemporary buzzword, “entrepreneurship” is definitely a rewarding proposition. But launching a startup comes with its fair share of challenges and struggles. Thousands of startups are founded on a daily basis, but only a handful of them get converted into successful business entities. The hard and bleak truth is nine out of ten startups fail.
If you are dreaming big and want to take your startup business to the heights of success, then you must be aware of cold statistics as to what percentage of startups actually make it to the top. This is not to discourage you; rather you will be encouraged to work harder and smarter. Also, working in a technology-driven competitive world, everyone seems to possess unique ideas and wants to outperform others.
Additionally, you might come across vicious circles. For instance, you need ‘X’ for ‘Y’, but you can’t acquire ‘Y’ until you have ‘X’. So as a budding entrepreneur, you must overcome these challenges associated with startups, learn to survive the inevitable struggles, and thrive in this business landscape.
Here are some key challenges to launching a startup:
Product and Its Market
One of the biggest challenges for every business is to find a market fit and create a product that will be demanded on this market. In view of this, you should validate your business idea accordingly. A recent report by Fortune says the top reason why startups fail is coming up with a product that is perfect for the market. Unsuccessful entrepreneurs create products no one wants.
You need to conduct a regular market research to understand your target market, identify consumer needs, and pinpoint realistic competitors. Investigate whether similar research has previously been done. If so, get hold of this relevant data that meets you objectives and budget. Before launching your product in the market, you need to ask yourself how it is better and different from competitive offerings. Is the magnitude only incremental or is it significant?
Hiring and Retaining Right People
Hiring right employees that fit in your culture is very important in getting a head start. Choosing a right team is beneficial for at least two reasons: experienced and productive individuals help you thrive straightaway; secondly, they collaborate with one another, share responsibilities, and solve problems. After all, teamwork is an integral part of getting your company’s feet off the ground. Warren Buffet once quoted “I look for three things before hiring my employees: Intelligence, Energy, and Integrity”. Also, in order for your business to grow, certain skills are crucial – you should know what those skills are and make your selection criteria on these lines as well. Furthermore, hiring right people and slipping into complacency is something you have to avoid. According to Pew Research, 40% of your employees will likely to change their jobs within a year’s time. So you need to make necessary arrangements to retain them.
Cash Flow Management and Finances
Challenge regarding cash flow is among the topmost reasons why startups wane into oblivion. It is really a daunting challenge to fund your own business as you have to spend money to make money. Thus making pragmatic use of your budget and controlling costs without sacrificing financial freedom could be the key in business planning and assessing new opportunities.
When it comes to financing, you have two options – obtaining funds from investors, or bootstrapping. Obtaining funds from investors is one of the hardest feats to achieve, but achievable nonetheless. Before you approach them, make sure you have a detailed plan and a defining element of assurance of ROI. You need a brilliant pitch, great customer traction, and flawless processes, in order to get funded. Bootstrapping, on the other hand, is a challenge difficult to overcome, but it saves you from over-dependency on investors.
Protecting Business Data
Employing data protection and security measures is a significant challenge you have to overcome. Cybersecurity is a big concern among entrepreneurs because they don’t usually have that powerful systems in place as that of large organizations. Damages due to cybercrimes are increasing significantly, while more than a third of attacks globally are aimed at small businesses and the number of hackers is growing, too.
Another reason for protecting your data is ‘compliance’. You can get into serious trouble if you don’t have a tight grip on your data protection. It becomes imperative for you to ensure the safety of your organizational data as well as customer data. An excellent approach to do this is to outsource to a data protection officer without the need for a full-time internal staff member. The DPO will help you on a range of issues, such as giving advice and guidance on GDPR compliance, DPIA requirements, creating and maintaining a data processing register, etc.
As a growing entrepreneur, you need to deal with your competitors fiercely and logically; failing which, you will remain far behind. For that, you need to have a fair idea where your competitors are, where they are going, and how fast they are going to get there. However, you don’t have to lose your sleep over them. You need to dissect what your competitors are doing right and what you are doing wrong.
Talking to your competitors can sometimes be helpful. Since you want to know your competition, don’t be afraid to reach out to other business owners in your industry. You can stay at the top of your game by keeping up with your industry’s trends. Furthermore, being competent keeps you from getting complacent, motivates you, pushes your limits, and helps you use your resources more pragmatically.
Founding a startup is not a cakewalk, making it a successful business venture is even faraway achievement. But history is replete with amazing success stories, which is for every entrepreneur to take a cue from. The greatest businessmen of modern times also faced difficulties, pitfalls, and even failed. But the true grit to stand up face challenges head on.
Smith Willas is a freelance writer, blogger, and digital media journalist. He has a management degree in Supply Chain & Operations Management and Marketing and boasts a wide-ranging background in digital media. You can follow him on Twitter.