Starting your start-up can be an exciting yet arduous journey. After all, with huge risks come big rewards, and the process usually entails growing your exciting idea into a business that functions successfully in the real world, making both customers and employees happy.
Today, there are over 150 million start-ups worldwide, with at least 137,000 start-ups launching every single day. The reality is that many start-ups do not find intended success, while some start-ups boom to prosperity – and there are rarely ironclad, objective reasons for either. The start-up ecosystem is rife with unpredictable events. Considering this, how can a new company prepare itself for the market? How can your start-up be prepared for the twists and turns ahead, and take the requisite steps to ensure success?
In this blog, we’ll pin down some major challenges start-ups generally face, and how you can both survive and circumvent them.
1. Funding and cash flow
Starting a company obviously entails an initial investment – whether it is personal savings, external funding, or both. The primary challenge is then creating enough cash flow that the business is sustainable and survives without waiting for the next sales cheque to arrive. Many businesses wind up precisely due to this cash crunch, with entrepreneurs struggling to clear invoices in time.
This challenge simply requires a certain amount of planning. It is essential for small businesses to have a steady cash flow, and extra funds for emergencies and dips in sales. Ensure an adequate gap between getting money, paying bills, paying employees and paying yourself. This can be achieved by refining your business plan and ensuring that you are well prepared for the worst case scenario. Since your business is new, you have less room for error, and it is likely you won’t make a profit right away. It’s therefore imperative that your business doesn’t run out of steam too early and builds momentum steadily.
2. Team building
It is indisputable that a start-up cannot be successful without the right team supporting it. A whopping 23% of start-ups fail due to lack of requisite talent and skill. Finding good people that are the right fit for your company can present a great challenge. The process itself is time-consuming, and one has to expend a great deal of effort to find, interview and recruit the right candidates. A wrong hire can also result in time, effort and resources going to waste. Since most small companies may not have the wherewithal to hire experts or highly experienced employees, one has to find young professionals with the right kind of potential. It’s also important to ensure that the different elements of your team work together seamlessly.
The first essential step towards making this process easier is to remember to look beyond resumes and job requirements to really pin down what constitutes a right fit for your company. Ensure that prospective employees get a tour of your company so both you and they can assess whether it is a right fit. It’s also important to remain flexible with hiring professionals for project-based, freelance or work-from-home capacities, which can help you cut costs and save office space. It’s also essential that your employees work towards the larger goal of your organization instead of simply turning up from 9-5.
An important factor towards securing the success of your business is to focus on constant innovation, and build a unique business model that works for your company. Surveys tell us that 77% of venture capitalists are of the opinion that Indian start-ups don’t push the envelope in terms of innovation and according to a study conducted by the IBM Institute for Business Value, 91% of start-ups fail within the first 5 years for the same reason!
Indian start-ups have an unfortunate reputation for remodeling themselves around existing international business models rather than charting a unique path of their own. Simply avoiding this can help you beat competition, stand out to your consumer base, solve business problems quickly and also increase productivity! Take time to understand the Indian market and what works within it rather than forcing a model from elsewhere to fit into your marketspace. Avoid diving into an idea simply because it is trending, but rather, think of ideas that are sustainable for the long-term. With the right resources, maintaining innovation can be an exciting and successful journey for any business.
4. Finding customers
Fitting your product into the marketplace and finding the right audience for it is an onus that usually falls upon marketing. However, what happens if your start-up has a limited marketing budget? It is a general consumer mindset to choose products and names that are already familiar. A major error made by many start-ups is creating a product in haste with no market research and no consumer demand, then trying and failing at finding a customer-base for it.
This can be avoided by first conducting a thorough and in-depth research of your customer-base and target audience. Who are the people you are aiming for, and how do their minds work? What purpose or need will your product satisfy, and how rampant is that need within your target audience? Establish a relationship with your consumers, and exhaust a word-of-mouth strategy to the fullest before jumping into an expensive marketing plan. While a well-established brand may be more preferable to consumers, a start-up often has an advantage with competitive pricing. All it takes is knowing and leveling your playing field!
5. Strong leadership
A start-up is often the vision and mission of its core founders and team. Budding small companies tend to be singular in their purpose and have a cohesive leadership of few but dedicated individuals. However, simply having the right ideas and passion for one’s business is not enough to guide it towards success. Good leadership forms a well-oiled system of respect, collaboration and synergy with the founders and the team. An entrepreneur often has to then manage the roles of leadership alongside other responsibilities that come with running a business, leading to a time-management crisis. It then becomes imperative for a good leader to not just excel at leadership, but also know how to delegate, plan a goal list and foster a team of people that work in unison towards these goals.
Every start-up journey is different, and every start-up is nothing but a product of passion, dedication and creativity. Simply honing one’s advantages and building one’s skill-sets while keeping the above challenges in mind can help one build the foundation for a strong, stable and successful business!