11 Challenges Startups Face

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“Obstacles are those frightful things you see when you take your eyes off your goals.” — Henry Ford

Startups struggle for many reasons. Some even die, or never quite attain the degree of success as early as they had hoped. They may not have anticipated obstacles and may not even know how to respond.

Here are just 11 of the challenges startups face:

1. Money

Yes, you need money. Unless you’re remarkably lucky and the cash flows in straight away from sales or investors, you will be in trouble. Cash flow issues will hit you hard, either delaying roll-out of products, hiring key staff, or fitting out new offices.

You will need capital to fund software or product development, office space, marketing (yes, you’ll need that too), and yet from it most success flows. The last thing a startup needs is to trim back costs, and shed staff, just when it needs to focus its energies elsewhere.

David Roth hasn’t much patience for entrepreneurs who founded a startup and then ran out of cash: “As leaders, it’s our job to manage the time and money needed to get to the next level without running out of either one.”

2. Neglecting marketing/sales

Some startups encounter problems because they haven’t put enough resources into marketing and sales. Sometimes they ignore them completely and put their faith in word of mouth, or if they’re a SaaS, that sales will grow organically online and sales and marketing aren’t needed.

It’s a false economy to put your faith in customers discovering you unless you make a concerted effort to grow them with a proper structured plan to promote your startup. It’s money well spent.

 

11 Challenges Startups Face| Teamwork.com High Performance Blog

3. Lack of planning

It’s amazing how many startups falter because they forgot to plan. Or perhaps they did, but just never covered all the bases. Key areas like sales, development, staffing, skills shortage, and funding should be part of your business plan, or be flexible enough to cope if events take an unexpected turn.

Contingency planning is vital, but so is a proper business plan. If your plan is all optimism, and fails to allow for surprises – and you can bet your life they’re just around the corner – then you’re heading for big trouble. Get the details right, no matter how small.

4. Finding the right people

Certain skills are crucial not only for your business to survive, but also to grow. Knowing the exact skills needed – and how to get those essential people – may determine how well your startup thrives. Delays in finding the right personnel will not only eat up valuable time, but also lead to severe bottlenecks, perhaps delay rollout of new products or services. These are delays no startup can afford.

You may also have hired the wrong people, and their deficiencies may be more apparent as a startup grows, especially if they are in the wrong roles. This happens when a startup expands and the cracks suddenly appear. However, as John Laven, CEO of Currency Cloud, wrote, finding the right people can also eat up valuable time that could be spent on other areas of the business.

 

11 Challenges Startups Face - Time Management| Teamwork.com High Performance Blog

5. Time management

There’s never enough time. There are a million and one decisions to be made and, last time I looked, there are only 24 hours in a day. So, start by eliminating or minimizing distractions – anything that gets in the way of running your business.

Prioritize decision-making. Ask yourself what is important and what can be postponed until tomorrow? What is stopping your company growing? Deal with those answers today.

6. Weak cofounders

Hard to believe, but your co-founders may be part of your startup’s woes, says Roy Hodges, deputy editor of The Startupmag.com. They may have helped develop a great product, but lack the skills needed to help run the business. Startups may need new executives to spread the workload. Failure to recognize the problem may exacerbate your woes.

 

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7. Scaling up

Lucky you. Your products or services are experiencing phenomenal growth – and also causing you lots of headaches. It’s not just a question of adding a few extra employees: they must be in the right areas – perhaps HR (you suddenly have a lot more staff), administration, payroll, support, perhaps even developers.

You may also need a larger office space, or to set up offices in other cities or abroad. Such is the price of success. If you have a plan and the cash to fund all this, great. If not, then prepare for a painful process.

8. Unwillingness to push yourself beyond the comfort zone

The founder or CEO may think he/she has all the answers, but do you really have what it takes to think – and act – outside your comfort zone? Ask yourself how much can you push yourself: Can you make a convincing pitch to potential investors when you need funding?

The ‘build it and they will come’ approach doesn’t always work, so are you prepared to put in the hard yards to make your startup thrive?

 

11 Challenges Startups Face - Competitors| Teamwork.com High Performance Blog

9. Competitors

No one ever said it was going to be easy, and despite your product or services being great, it’s a crowded marketplace. New rivals may have altered the playing pitch, so having the right strategy, or being able to think on your feet quickly and adapting to the new reality will define your success – or failure.

10. Lack of Mentor

You may have a great product/idea, but lack the necessary guidance, market experience, and knowledge to move a stage further. That’s where a mentor comes in, with the wisdom and confidence to help you clear those roadblocks that are holding your startup back. Mentors can also help you strategize better.

According to Rhett Morris of Endeavor Insights, whose firm conducted a major study of New York tech firms last year, 33% of founders who are mentored by successful entrepreneurs went on to become top performers. Having somebody you can lean on when major decisions have to be made, or startups need a sounding board, is very useful.

11. Poor management

One thing startups can’t afford is ineffective management. A team that worked well in the initial stages, may find itself exposed as the startup expands, or is tested by everything from poor sales or market conditions. Procrastinating won’t help. The issue needs to be tackled urgently or the result will prove very damaging.

Takeaway: All startups face challenges, but some can be avoided with careful planning. The others need quick decisions when they do occur.

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