Startups are not for the weak. An entrepreneur needs to be smart and decisive. Knowing what challenges you will face and how to overcome them will increase your chances of success. Below are the most common problems faced by startups and tips to overcome them.
1. Money
Raising capital is the No.1 challenge for startups. You can start a business with personal savings but a decrease in cash flow and the lack of a clear funding plan will bring a startup to a halt rather quickly. When you need to grow, you should not worry about how to reduce costs and save on staff.
Any entrepreneur should answer the question "Can my business grow without attracting investment?". If this is critical to survival, you need to explore possible sources of funding from the very beginning.
To facilitate the search for funds, you need to expand your business contacts. It is important to build relationships with potential investors before the money is needed. In this case, you will not have to turn to strangers when the time to ask comes.
2. Neglect of marketing
Some startups don't want to invest in marketing. They believe that they will find customers without a specific promotion plan. This misconception can be fatal to a business. After all, not the product that is better is sold, but the one that is more famous.
3. Lack of planning
It is necessary to plan not just the key areas, such as financing, promotion, development, personnel and others. It is vital to understand all the details, no matter how small they may seem. This will help you deal with unexpected situations. They will inevitably happen, even if the entrepreneur has developed a perfect plan.
4. Building a dream team
A startup is only as good as its team. Without smart and reliable people, one cannot realize an idea or fulfill a plan. But the knowledge, skills and competence of employees are no more important than their attitude towards a startup and work ethic. For example, the best small business accountant can take your startup to a new level. The team should fit the company culture.
When hiring employees, an entrepreneur should give them an attractive salary. They should captivate them with their vision of the business and motivate them to achieve their goals.
5. Weak co-founders
Sometimes the problem with a startup is its founders. They may have developed a great product and launched a business. But often they do not have the necessary experience and business mindset. It is necessary to recognize the problem in time and involve professionals, and not try to develop all business processes on your own.
6. Correct positioning
This is another problem that a startup can face. No matter how much a novice entrepreneur believes in his idea, they should know for sure that there are people who need their services or goods. If the target audience is not defined or is very small, the startup will not be able to sell its product.
7. Distribution and Trust
This is probably the most difficult thing for young companies. How does a consumer know that a startup exists and why should they care? Instead of dreaming about the growth of orders and profits, it is worth taking care from the very beginning of how the entrepreneur will distribute their product and win the trust of customers.
You need to make a list of "dream partners" - identify the industry leaders and brands that inspire consumer confidence. And then find a way to build a business relationship with them.
For example, if a startup produces healthy food products, through which retail chain is it better to sell its product? If an entrepreneur has developed new software, which companies' feedback will help promote it?
8. Connection with the client
It is not enough to tell about yourself on the Internet and social networks. When launching, a startup should fight for every customer. This means manually attracting users and providing an exceptionally good service.
At first, this may seem laborious and exhausting. Small sales can be demoralizing. But it's worth taking note of Airbnb's Brian Chesky's advice: “Build your business one person at a time. Just focus on 100 people. If they love you, they will sell your product to others."
9. Feedback
An entrepreneur should not blindly rely on either his intuition or market research. You need to communicate with your customers to understand their needs. And in order to improve, you need to accept their criticism.
10. Evolution
It's not easy in business. Let your product or service be great - the market is crowded, and competitors are not standing still. New opponents will periodically appear on the playing field. To cope with them, the entrepreneur needs to think quickly and adapt his business to the new reality. Having the right development strategy determines the success or failure of a startup.
11. Legal errors
Startupers who are passionate about the idea do not always pay attention to legal issues. Even more rarely, they can afford to hire a separate lawyer. What does it mean? When looking for investments, you can not pass due diligence, and sometimes you can lose a round even after signing a term sheet - a document on the main conditions for attracting investments. To prevent this from happening, basic legal errors should be avoided.
Never ignore the signing of the partnership agreement. If you don’t want to discuss uncomfortable issues with your partner right away, you may regret it in the future. From the first day of work, it is necessary to agree on the areas of responsibility, the procedure for making joint decisions, options and consequences for the withdrawal of one of the partners from the project, and options for overcoming conflict situations. All this should be written in the partnership agreement and periodically reviewed if the situation has changed or a new participant has appeared.
In world practice, there is the concept of "napkin agreement". The bottom line is that a partnership agreement should exist in some form, even written on a napkin, and in some countries, it can be recognized in court. Your agreements should be clearly stated and signed by all parties, preferably with witnesses.
Checklist On How to Meet the Legal Minimum
- Prepare documents for the website or application, especially if this resource is the main means of lead generation or service delivery. First, we are talking about the Privacy policy, Cookie policy, Terms of use, and Terms and conditions). You should not download or copy these documents from other websites, as they should contain a clear description of the company's activities and reflect the business model.
- Design templates. In the development process of a startup, there are contracts that will be used regularly (for example, a non-disclosure agreement and service contracts with developers). They can be developed one-time and used as templates until a permanent lawyer appears.
- Provide access to sources. Startup owners should have access to the source code repository, cabinets, and other resources, where the important information is stored, source code is stored or the system is logged in. Sometimes programmers leave a startup without handing over logins and passwords.
- Check the uniqueness of the trade name. If the startup name will violate someone's rights or be used in parallel by other companies, expect problems or rebranding costs.
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