Launching your own startup business can pose a lot of challenges for an entrepreneur. But it should not stop you from getting into the market and establishing your brand. We have assembled the most common problems that startups can face in the early stages and how you can overcome them.
1) High cost of business
Resources are scarce, and the number of new businesses is booming. Most entrepreneurs are reluctant to launch their businesses due to the fear of losing their investment. Startups usually face negative cash flow as their expenses are more than the revenue they generate.
The good news is that the cost and time have significantly dropped in latest years.
Fortunately, the phase doesn’t last for long as slowly the business becomes profitable. To resolve cashflow problems, you can apply for additional loans or even sell unused assets.
2) Stiff competition
Whenever a firm enters a market, it is bound to face some competition. Your business has to offer something new to start making sales and accumulate profit, or else it will get outcompeted.
The startups should take one step at a time and try to develop a Unique Selling Point (USP) to stand out from the rest. The objectives should be clear and realistic. For instance, if you enter the cola market and your first objective is to overtake Coca-Cola, you would never achieve it. The clever move would be to pick a niche instead of aiming for the whole industry.
3) Saturated Market
Over 42% of products and services fail as there is no market need for them. Saturated markets are difficult to penetrate and should be avoided.
To overcome such situations, you should always conduct market research and determine whether there is a need for your product or service or not. You can also wait for the right time to launch the product as there could be a need for your product in the future.
As you can see that the most common cause of failure is no market need for product.
4) Managing your finances
Another issue that startups face is the failure to manage their finances. Entrepreneurs often take everything on their shoulders, including cash flow management, resulting in inaccurate results and time loss.
Most startup owners are inexperienced in accounting and bookkeeping, leading to errors and missing out on tax details.
You should hire a professional accountant immediately to help out with the finance to evade this problem.
5) Marketing products
Most startup entrepreneurs lack the understanding of marketing tactics that can be used to boost sales. Every business wants to scale its business, but the marketing should be spot-on.
To get better results, startups should outsource their online marketing to a professional team. It will save you time that can be allocated elsewhere and will make marketing more effective.
6) Incompetent team
An inadequate team can have a detrimental effect on your business. It would not be enough if you are the only one who is motivated and doing all the hard work; meanwhile, your team is inefficient and demotivated. Bad staff can ruin all your hard work in a matter of months, and many startups fail due to this reason.
To avoid this problem, you should only hire motivated people that have strong educational and working backgrounds. You should offer temporary contracts to non-core employees to keep the cost at a minimum.
7) Lack of planning
Launching your business can be tempting, but it should not be done without a proper business plan. Lack of planning can lead to chaos and confusion in the industry, and your business will inevitably fail. Running a business without planning is like steering a ship in an endless ocean without any direction. You can miss out on potential investors if you don’t offer a solid business plan to them with projected growth.
Business owners who set themselves before launching a business are more likely to succeed and grow. And that is why a marketing plan is significant for your business. It should cover the area of marketing, finance, sales, market research, and staffing. Remember to update your business plan as your business grows and develops.
Final thoughts
Launching your startup is risky and full of challenges. It is not like your typical 9-5 job. Startups often need more hours to be invested that can take a toll on your physical and mental well-being.
Nonetheless, you should always be prepared for challenges on your path and try to overcome them.
