Entrepreneurship is on the rise as starting your own business isn’t as hard as it used to be; with a resourceful market, available funding opportunities, and the internet –nothing is stopping you from venturing into your business idea and beginning your startup.
However, having your own startup comes with its own set of challenges and struggles that you need to overcome to turn your startup into a sustainable and successful business. Research has proven that 90% of startups never make it past the first five years in business and this can be due to poor planning, a lack of funding, or minimum marketing. So, to help you succeed, we’ve gathered all of the common challenges that face entrepreneurs within the first five years of a startup – and most importantly, explained how to deal with them.
Efficient Financial Management
Funding a startup or small business isn’t easy and you can quickly go through your funds if you’re not careful. Blowing through this money can lead to your business shutting down in the end; a recent study has shown that almost 46% of startups fail because they run out of cash. So how can you stop this from happening?
There are multiple ways startups can fund their business whether it’s through personal savings, crowdfunding, bank loans or credit, trade equity, or even small business grants through your local SBA chapter. But with limited resources, you need to ensure you have a clear budget from the start and have a plan for what you’re going to do with the funds. This should be included in your business plan during the initial stages of the startup. Also, keep records of all your business expenses to stay on track and spend within your budget.
For example, set a budget for marketing, sales, hiring, and the website, and don’t overspend because it’ll negatively impact you later.
Maintaining a Professional Image
Many startups launch their business without a designated work office; many have a home-based business or a virtual business with remote employees. Those that do go out of their way to rent expensive office space, usually wind up regretting it when a big chunk of their budget is wasted on rent, but in order to give a professional image to your business, you need to have a professional business address.
Your customers don’t want to pull up your home address or a co-working space when they search for your business online; they want to know that they’re dealing with a well-established business. This doesn’t mean that home-based businesses can’t be successful, however, using a commercial address on your website or for business mail would be the professional choice. To save money and have that professional image, you can sign up for a virtual business address. A virtual business address is a real street address in a corporate location in a major city, like NYC or LA. This will secure you a spot in the competitive market and will help you build your brand. Other things to do to strengthen your image include having a well-built website, a business phone number, and a business email.
Doing the Right Amount of Marketing and Branding
You can have a unique and useful product that has a wide target audience but without the right marketing strategy, it is useless. Many startup owners believe that they have a great idea and that should be enough to turn it into success; however, marketing contributes to almost 80% of a product’s success. Don’t be afraid to spend some money on different marketing channels to get the word out like social media, blog posts, guest posts, ads, etc. Building a strong network around you and communicating with other businesses in the industry can also help your branding; networking is key for the growth of your startup as it presents you with opportunities you wouldn’t have found on your own.
Hiring the Right People
When you’re starting out in the business scene, you need to surround yourself with people that will help you improve your product and service, not negatively affect productivity. A recent study states that 39% of businesses report a decrease in productivity due to a bad hire.
Before putting together your team, define the major roles and who you need in your business. Don’t waste your money on an abundance of employees when you or someone else on the team can easily get the job done. Business growth is not defined by the number of employees you have; when you set the roles you need – start hiring. Many startups fall into the mistake of bad hires because they rush through the hiring process, without following the right procedures such as pre-screening, verifying qualifications and past employment, running a background check, and reaching out to references. Don’t waste your time and resources on hiring the wrong person; try to get it right the first time around.
Setting Unrealistic Expectations
Usually, when a startup is off to a good start, they start setting unrealistic expectations that can lead to the doom of their business. Having goals is a great thing to have, but they need to make sense in the current market and be achievable. At the start of your business, you created a business plan that includes all the steps your business will take, resources, marketing strategies– now stick to it.
Success is short-lived, what really matters is creating a workflow that encourages sustainability. For example, time management is an important factor and you need to dedicate your time properly per project without losing focus of your goal. Instead of setting long-term unrealistic expectations, set short-term ones that are achievable – and consider all factors like project management, time, competitors, and anything else that could affect this goal.
Competitors and How to Stand Out
One of the biggest challenges that face startups is being in a competitive environment where other businesses have more experience in the industry.
Instead of trying to overtake these competitors, consider this a learning opportunity where you can pick up on tactics and strategies to improve and evolve your startup. You can learn from their positive strategies as well as their losses, what worked for them and what didn’t. Most importantly, you need to learn what makes your business special, do you have better prices? Does your product have more features? A sleeker design? Finding your selling point and using it to win over customers is a huge step in this competitive business world.
As a startup, you’re looking to face multiple challenges, but nothing great comes easy! If you efficiently plan out all aspects of your business and leave nothing uncovered (marketing, finances, management, etc.) – you’re bound for success.