Launching a startup definitely has its challenges but also can be like living your dream every day. The humble beginnings and phenomenal success of the likes of Epic Games and Facebook serve to light a fire in the hearts of many entrepreneurs.
More than 800,000 genius ideas began their journey as startups or small businesses in the U.S. in 2020.
Image Source: Statista
So, do all these startups evolve into successful businesses?
No. Of course not. In fact, most of them may fail to survive the first year. As inspiring and alluring as the idea of a startup may be, startup challenges are plenty. At every decision point, the mettle of your business idea is tested. Talk to any successful startup and they will narrate a success story dotted with hurdles, both big and small.
What does it take to move from being a brilliant idea to a billion-dollar brand? Little more than the determination to overcome challenges. And what are the challenges? The top 10 are listed below along with suggestions for overcoming them.
Top 10 Common Startup Challenges
Here are some of the common startup challenges that startups face in today’s market. We also share a few expert tips on how to overcome such challenges.
1. Failure to Fully Develop a Business Idea
Challenge: A startup has to start from scratch! Developing an effective business plan is one of the first challenges for startups. Benjamin Franklin was right when he said, “By failing to prepare, you are preparing to fail.” Startups that fail to work out a defined business structure often stumble before they even begin to walk.
Action: As an entrepreneur, you must see beyond the obvious and convert your business idea into a business plan. Also, you can create a form to get feedback on your business plan. Chalk out the details and work on them.
2. Lack of Demand
Challenge: Is there a market need for your product or service? Understanding market demand is extremely crucial for a startup to be successful. Think about it. No matter how good your business idea might be, if there are no buyers for it, you’re bound to fail.
Action: Research the market. Get a good understanding of what potential customers are looking for. Then, strive to meet their needs. Use strategic partnerships and referral marketing to create demand and win more customers.
3. Gaps in Skills and Business Management
Challenge: You may be a passionate entrepreneur, but you may lack the skills to manage your business efficiently. This is one of the biggest challenges for startups. More often than not, first-time business owners falter at places where an experienced manager would cruise. Not to mention the enormous demand for your time, energy, and resource management skills. There’s simply no substitute for these.
Action: Get yourself trained in crucial aspects such as marketing, sales, and managing finances. You can gather enough valuable lessons from the market, your customers, and competitors too.
4. Lack of a Content Strategy
Challenge: Next on the list of common startup challenges is successfully using content to drive business growth. You need to make some noise about your brand, but how do you do that? By creating and publishing optimized content. Sadly though, not many startups have a good content strategy in place. Lack of online visibility is one obvious reason for the lack of awareness among customers.
Action: Get started with a diverse content marketing strategy. Invest in emails, blogs, webinars, or social media campaigns — whatever it takes to let people know about your brand. Also, invest in good tools for content creation to get the best results from your content marketing initiatives.
5. Hiring the Right People
Challenge: As a startup owner, your biggest asset will be your team. It’s crucial to employ the right people who have passion and experience. Finding hardworking, resourceful, and skilled professionals may be tough, given the budget constraints you may have. However, without an effective team, achieving the set goals can be quite a challenge.
Action: Get skilled, like-minded people on board who have the same passion for your business. That’s the best way to address the myriad challenges facing startups.
6. Not Focusing on the Local Market
Challenge: Before going global, you should go local! Startups that forget to follow this fundamental rule will find themselves wanting for customers. 76% of users visit a business they find online, and a further 86% of people try to locate a business on Google Maps. Failing to create a local presence may prove to be extremely costly for your business.
Action: Target the local market with your marketing strategy. Let your local audience know what you have in store for them. You might design a chatbot for your website that could provide all the necessary business-related information 24-7. You should also consider investing in local search engine optimization (SEO).
7. Poor Financial Management
Challenge: This is one of the biggest common startup challenges for startups. If raising funds for your business idea is one end of the issue, managing those funds efficiently is a test in itself. Poor financial management leading to a severe cash crunch may result in bankruptcy and business closure.
Action: You should understand and learn to balance cost and profit. By creating a cash flow forecast, you can appropriately manage your funds.
8. Dealing with the Competition
Challenge: Who do you see as your competitors? Are they a thorn in your side or a stepping stone for success? Your approach toward competitors will define your success story. Startups that succumb to pressure often cease to grow.
Action: Learn to use competition to fuel your business plan. Competitors should keep you on your toes to create, innovate, and excel.
9. Lacking a Crisis Management Plan
Challenge: Unanticipated circumstances could affect any business at any time. It could come from within your organization or from outside. When a business is slow to respond and adapt to unforeseen circumstances, it may well pay a huge price for it.
Action: Work on your crisis management plan. Put it into action. As the leader of a company, you should be prepared for the worst.
10. Security Concerns
Challenge: Security risks keep mounting for businesses. They rank high among the challenges for startups. Threats may come in the form of physical risks or online threats. Most startups are at risk of falling for malware, ransomware, and data theft. If and when a business fails to invest in top-notch security measures, it may be exposing itself to all kinds of security concerns.
Action: Learn to prioritize the security of your employees, property, product, and data. You should follow all current security protocols to stay safe on all fronts.
Don’t allow common startup challenges to catch you off-guard.
Startups are becoming quite popular. Everyone with a good idea wants to start one. While getting started may be exciting, sustaining a business is a daunting task.
Getting acquainted with the challenges for startups and staying prepared for them will give you the upper hand. If you understand and prepare for these challenges, you greatly increase your odds of success.