Table of contents
Let’s look at how to face common startup challenges. A startup founder’s life is a tough one. If you can’t read the minds of customers, it can be hard to know what they truly want. If customers don’t buy your product, it becomes nearly impossible to know if it’s because you have the wrong idea or because no one wants your particular product. And being responsible for delivering a valuable and compelling new service only intensifies the problem!
Fortunately, there are some tried and true techniques that have been tested in many successful startups. They will help you take care of these 10 common challenges that we all face:
A startup that has a large budget can move fast. A startup that has no budget will have to spend time figuring out how to make money. Your budget and the speed at which you gain cash flow are inextricably linked.
If your company cannot find significant revenue within 3 months, you need to reevaluate your business model, strategy, and product-market fit. If your company is a software company and does not have a revenue stream for at least 6 months, this may indicate that there is something fundamentally wrong with the product or that you are entering a market too big and too competitive for your startup. Also keep in mind that if someone else provides similar services for less money, you are probably not the best choice.
2) Finding the right team
When you start off a company, you think that everyone you know has the best idea. But in reality, the smartest person for your job is not always the person who comes closest to what you have in mind at the beginning.
Startups are like relationships – they take time to build, and there needs to be a balance between a strong founding team and an innovative inner circle. It can be a tough balancing act to get just the right mix of people with complementary skillsets – and oftentimes more than one founder will try to ‘fix’ a problem by bringing in a chief technology officer (CTO) or other expert with seemingly off-the-shelf solutions.
How to face this.
Some startups choose to hire outside consultants or bring in CTOs who are less invested in the company’s success. On the other hand, you can choose to pay someone else. But it is important to be clear about the ROI of each person you bring into the company and focus on a handful of key employees, even if that means delivering half-baked features.
Another option is to offer stock options to employees where they hold the same risk as the founders. This can offer a lot of motivation.
3) Risk Management
Some startups have very limited resources, which means they can only afford to take a small amount of risk. For example, they don’t have the money to hire legal counsel, marketing teams, or sales teams. Or they may think that if they can get away with it, all the better.
How to face this.
The scary part about taking risk is that your startup will be less able to handle the consequences if things go awry. You need to learn how to deal with something that almost certainly will happen at some point. There is a learning curve for most startups and being an experienced startup founder will help you take risks more cheaply than inexperienced founders in your industry would do.
Here are some tips to help you feel more comfortable taking risks:
- Have a contingency plan, and be prepared to bring in outside help like lawyers, accountants, and marketers.
- Plan out what will happen if we fail, and what you’ll need to do in the next steps. Review your financial situation every 6 months with everyone on the team.
- Write down which projects you considered funding yourself that might have failed if something bad had happened. You need to be able to report back your progress and act on it quickly if something happens (e.g., fixing the problem).
4) Managing the competition
Just because there is a market for something doesn’t mean everyone will make money on it. Growth and competition are two sides of the same coin in startups, and it’s usually easier when you have someone to run the other side.
How to face this
After setting yourself apart from your competition, it’s time to figure out how competitors will approach their markets and you, especially if they are well-funded or have access to large amounts of investor capital.
- Craft a vision statement that
(a) states where you intend to take your company,
(b) distinguishes you from your competition
(c) has a clear-thinking mission that everyone on the team understands and can get behind.
- Know what products are the most important in your market and when those products will be released.
- Take note of firms that could have an impact on you, such as venture capitalists and journalists who might work for top publications. Monitoring them will help you with your own decision making and better insights into what is going on in the startup world as a whole.
- Monitor customer reactions to competitors’ products so that you can stay ahead of new developments in your market.
5) Overall lack of management
Startups have to make difficult decisions every day, under tight deadlines and always balancing multiple priorities. Navigating the inevitable chaos and turning these tough decisions into long-term opportunities takes strong leadership.
How to face this
Every startup should learn how to be self-aware and act in a selfless manner, even when it comes down to their own income or personal interests that are at stake. Being proactive and working together as a team is crucial for success.
- Set up regular meetings where you discuss the team’s progress and plans of attack for upcoming challenges. Be clear about the exercises and goals of each meeting.
- Use project management software that can help you keep track of day-to-day operations in your startup.
- Self-evaluation – this is not easy, but knowing your strengths and weaknesses will help you in future situations or with any new employees.
- Consulting from a managerial coach who can work with you to develop the skills necessary to manage your team with confidence.
- Consult from a business strategist who can give advice whenever you are not sure what to do next.
The act of starting up is an exciting ride for any entrepreneur, but it comes with its own unique set of challenges.
It is best for you to understand the characteristics of each type of challenge before launching your company.
A startup can often be seen as what some other startups decline into when they run out of cash, or overreach their reach. That being said, there are many ways for a startup to become what was once considered a failure into something others might take advantage of.
You might be interested in why are startups risky, are they a worthy investment?