Starting a new business requires determination, motivation, persistence, and the ability to plow through any challenges or setbacks that may arise.
According to Forbes, a whopping 90 percent of startups fail, and you need to have what it takes to be part of the 10 percent that succeeds.
All startups will face challenges; the difference between the top 10 percent and the bottom 90 percent is how you face those challenges and what you do about them.
Following are some of the most common challenges startups will encounter and how to overcome them.
1. Lack of Sufficient Funds
Many startups go out of business due to financial problems. There are two things that cause this: Not ensuring enough funding before starting out and not managing your finances efficiently.
Many startups don’t allocate sufficient funding for their marketing and advertising costs.
Make sure to secure enough funding before starting your operations. Have enough wiggle room for unexpected expenses that may come up.
In addition, make sure to hire a professional accountant to track your expenses, revenue, and finances. You want to make sure that your business is generating a steady cash flow and that you are not spending more than what you are making.
Keep in mind that it may take some time for that to happen; not all businesses will be able to generate a positive cash flow from the get-go. Take that into account before starting out.
2. Lack of Sufficient Planning
You also need to have a solid business plan going in. Of course, you should be flexible and go with the flow, but without a blueprint to base your operations on you will go nowhere.
You also need a growth plan. If you aren’t focused on marketing, advertising, and spreading the word about your business, your growth rates will remain stagnant and you won’t be able to scale your company.
Two important things you need to focus on in your business plan are sustainability (whether you can keep earning revenue over time) and scalability (whether you can actually gradually grow your business and increase your sales, revenue. and profits).
3. Not Having the Right Team
You need to create a team of individuals who have the right mindsets and skill sets that are necessary to grow your business.
Going back to the previous point, for example, you need to have people on your marketing team who know the ins and outs of current advertising trends.
They should know how to spread the word about your business and attract new customers in the digital world.
Another thing that is often overlooked is having people who have industry-specific knowledge. You need to have people on your team who know how things work in your industry and who are able to make the right connections.
Besides having a good team, you need to have what it takes to be a good leader. Being a manager and being a leader are not the same things.
4. Strong Competition
You WILL face competition. Many startups go under because they can’t gain the upper hand over their competitors.
If you’re just going to be one dime out of a dozen, you won’t get anywhere.
You need to focus on marketing yourself with an angle that makes you unique, whether that is through your brand message, a unique product or service, a unique customer experience, a unique loyalty program, or anything else that makes you stand out from the crowd.
5. Not Solving a Problem
You need to find a problem to solve or a demand to fill.
Startups that succeed are those that fill a void and fulfill unmet needs.
6. Insufficient Customer Service, Trust, and Loyalty
You need to have the right people managing your customer service department. These people need to be trained on how to act friendly and professionally with clients and how to resolve issues quickly.
Especially with a handful of customers, you can’t afford to lose them. The focus should be on increasing their lifetime with your business. It’s easier to retain an existing customer than to win a new account.
You also need to work on earning the public’s trust. This takes time and dedication, as it is only something that can be obtained by offering a high-quality product and customer experience over time.
However, the way you present, market and advertise yourself will also have a great impact on the public’s perception of you.
Cybersecurity and data privacy is also a big part of this. Customers want to know that you are protecting your client data and that it is secure.
Without great customer service and without inspiring trust, you won’t be able to keep your customers.
You also need to focus on customer loyalty. Customer retention should be a big part of your strategy.
Besides offering a great customer experience, you should consider creating a loyalty program to encourage repeat customers.
7. Expectations, Determination, and Motivation
Unrealistic expectations is another reason why entrepreneurs end up quitting or giving up. Remember we said you should have a plan?
Well, that plan may look perfect on paper, but things may end up going a lot slower than you originally.
Another common scenario is experiencing a big growth spurt in the beginning but then seeing a slow-down or even setbacks, which can be discouraging.
You need to manage your expectations; success is something that is acquired over time, not overnight.
Most importantly, you need to stay motivated and determined to reach your goals. You need to be persistent and stay focused through the hurdles if you want to eventually be successful.
8. Not Getting Good Advice
It’s crucial to have a mentor or advisor(s) to guide you through your entrepreneurial journey. At the very least, have someone who you can go to for a second opinion.
Start-ups are vulnerable to making common mistakes that include –
- Investing in multiple marketing activities to begin with
- Or not investing in the right marketing channel
- Not having a responsive frontend
- Not maintaining contingency fund
- Spending too much on stock and inventory
Starting a business requires a certain level of self-reliance, and this ends up deterring some people from letting go of their ego and asking others for advice. However, a second opinion will always come in handy.
This also goes back to the point we made about having a good team.
Nobody is an expert on everything. You may be skilled in one area, but when it comes to things such as website designing, accounting, financial management, cybersecurity, legalities, and online marketing, you may need to hire experts who you can rely on.
Wrapping It Up
Being a successful entrepreneur requires learning from your mistakes, reaching small goals, and building up success gradually.
By using the above tips, you can overcome your challenges and emerge successful.