A common problem that startups struggle with is the lack of experience. Progression is a bumpy road. While there are some lessons that entrepreneurs need to learn the hard way, there are also some lessons that are easily avoidable with some basic research. It is always wise to look before you leap – and this article has all the necessary information you’ll need to ensure that you do not make any foolish and hasty mistakes in your startup journey.
What do Startups Struggle With?
For starters, startups are often overly optimistic. While optimism is an asset, too much of it might be poisonous, especially if the company lacks a coherent strategy. If a company fails to strategise, they are in for a tough ride. Strategising may sound like a pain in the neck that you would want to procrastinate from, but as the saying goes: if you fail to plan, you plan to fail. Never be afraid of creating a concise and coherent strategy before you start your own business. You may never feel ready, even with all the planning and strategising you have done, but there is a lot to gain from laying out the proper groundwork before beginning your startup journey.
On the other hand, some companies run into problems precisely because they plan too much and become overly pedantic. For instance, some companies fail because they end up being too concerned about catering to a marketing that is either too small or too volatile. There might not be enough reasons for a compelling value proposition, or an event that would cause the buyer to commit to regular purchases.
Lack of adequate marketing research is a common issue contributing to the failure of many startups. Additionally, incorrect conclusions from market research is also equally fatal. Just as we mentioned earlier, it is vital to plan before you begin. You do not necessarily need an elaborate and comprehensive plan that thoroughly covers everything, right down to the smallest last detail. Instead, what remains the most important is for you to have a corporeal and strategic plan to give you a better sense of direction with where you want to bring your company.
Remember, a startup, in its beginning stages, is often lacking in the department of resources. That is what makes a concise plan all the more relevant. After all, if you lack direction, you may very well end up floundering and wasting what little resources you have – forcing you to end your business journey early.
If a startup is providing a service that nobody needs, or a product that nobody wants, then it will continue to burn through cash. No sales can be made. No sales means no income and in time to come, the company will run out of cash and resources. While raising money does not guarantee success, it sure is important. Money is necessary for you to procure more resources and it can essentially buy you time before your business makes it big. Money is not everything, but with it, you will be better able to bring in more opportunities to work wit.
Common Challenges that Startup Businesses Face
Cashflow and funds are common considerations when starting a company. They are also important factors in deciding the life and death of the company, though these are just a few of the long list of reasons why startups often end in failure.
But fret not, for today, we have compiled a list of the most common reasons on why startups fail. We have also broken them down for further analysis to ensure that after reading, readers can make efforts and take conscious steps to avoid this fate from befalling them. What are you waiting for? Read on to find out what not to do when it comes to the beginnings of your startup business!
If your costs are high, it ruins your profit margin. Startups face the common challenge of high costs. Some industries have higher startup cost than others. This is usually referred to as fixed costs.
This cost can come in the form of advertising expenses, deposits, salaries for staff training, installation and renovation charges for your office or storefront.
Overcoming startup costs is not easy. Sometimes there is no way around it. You need to be able to negotiate prices and make good use of your money. Every dollar you spend should go a long way. As a small company, you might not be able to reap many economies of scale to save up on costs, which is why it is crucial for companies to explore the idea of joint ventures, especially in the early stage. Having a strategic partner to bring more benefits to the table could help you grow faster and more in the long run.
Not Selling Enough
As mentioned, when it comes to starting a business, sales are the most crucial thing to keep a company afloat. If your company is not selling enough, no amount of funding will be able to last you through the red. This is especially so for startup businesses, who are newer to the industry and have a decidedly smaller pool of funds to work with. Hence, it is considerable easier for startups to run the risk of running out of resources faster.
There could be many reasons for why you are having poor sales. Just like a doctor that helps you treat the symptoms while looking for a root cause of your illness, it is important to have an analysis of why you are not selling enough.
There could plenty of aspects, from inferior marketing services to an overly costly product, and we have a whole list. Read through it, identify which part of your company is falling short, and carry out the right measures to ameliorate the situation.
The most common reasons behind why a company does not sell enough includes:
- Not paying sufficient attention to your customer’s wants and needs
- Poor or less than ideal working conditions
- Unoptimised operation system
- Marketing and sales unaligned
- Product or Service has no Unique Selling Point
- Mismanagement or lack of training
- Economic downturn
- Lack of publicity or marketing
Only when you find the root cause of the issue, then you will be able to solve your problem of poor sales. Throwing money at the problem will not make it go away. If anything, the problem will consistently surface because you did not manage to ‘solve’ it, per say, only postpone the inevitable fate of your startup. Hence, it is of vital importance that you identify the root cause of your problem and take the necessary steps to combat it.
Erratic Sales Volume
When there are erratic sales volume, it is a sign of worry. While not necessarily an immediate red flag, having erratic unexplainable sales volume often points towards unoptimized aspects of your business. If you ignore it, it may mushroom into an even more serious problem in the future that will require much more resources to solve. Hence, it is always best to identify such problems before it snowballs into a larger issue.
For example, your sales funnel might not be optimised. Or your campaign programme might only work on a seasonal routine. Your website landing page might not be funnelling well. Alternatively, perhaps your digital product pages might not be search-engine friendly, and is only attracting a mere portion of your target audience.
Worse still, you might have failed to incorporate digital marketing into your business setup, causing you to miss out on a significant portion of your potential customers. Digital marketing is a crucial resource that has low barriers to entry and takes practically zero effort to tap into. To fail to utilise this platform efficiently would likely prove to be a costly mistake. If you have not already integrated digital marketing into your business setup, the best time to do so is right now.
Either way, no matter the reason why, if you are faced with erratic sales volumes, you are at the mercy of your consumers, and that statement of observation is never a good compliment for any business to receive.
Another aspect that might not be optimised may be your company’s marketing portion. Sales and marketing go hand in hand. When sales are not coming in, it might be because the lead generation funnel is not working well.
You might be stuck with mediocre marketing. Having inexperienced staff or lack of a proper marketing team is the number one reason for mediocre marketing, and that is why many companies grow at a slower rate than they want to, and fail to reach their potential. When it comes to marketing, it is important to place your faith and dedicate your resources into an experienced marketing team. If you do not have the patience or time to build one from ground up, consider hiring an external marketing firm for your marketing campaign needs.
It might be an expensive expense, but the cost of mediocre marketing is much higher. You might fail to attract customers to your site, while often leads to poor sales and loss of existing customers. You need a good foundation and strong marketing channels to have constant leads. With proper marketing, companies can even do well and prosper in times of crisis or economic downturn.
Mediocre marketing usually occurs due to a lack of proper strategy and marketing direction. Sometimes, it is easy to be blinded or lost in your way as your journey through your company’s growth. This is why an external party, such as a marketing or PR firm is best positioned to provide you with the insight and perspective that you require.
The Basic Startup Problems That Businesses Face
Most entrepreneurs fail because they try to do everything by themselves. It is otherwise known as the hero syndrome.
Doing everything by yourself will often do more harm than good. It will cause you to be the bottleneck of the whole company. As the saying goes, work on your business instead of in your business. You need to learn how to delegate matters to your staff instead of trying to juggle every task on your own. A company cannot be run by one man alone – nobody would have enough time in the world to build and maintain a roaring and successful business single-handedly. Delegation is not a sign of weakness. It is a sign of efficiency – and you certainly should not shy away from it.
While it may seem time-consuming in the short run to train your staff members and raise them to a level that you would be able to trust the company with, be patient. Bring your team through the hoops to learn from their mistakes and you can rest assured that the time you spend training them will pay off in the near future.
This is still a better use of your time than you are splitting yourself across the many tasks that the company needs. Every minute you spend working on your menial tasks is a minute that you could have spent strategizing, planning, or negotiating the best business deals. There are some decisions and moves, that only you, as the leader of the company, can make.
You are the captain of the ship, the one in charge of the bigger picture.
And just like any ship captains, you can’t pilot the ship alone, and you can’t be everywhere on the ship at the same time.
Sometimes, it is important to let nature takes it course, while you handle the steering wheel.
Why Do Most Businesses Fail? What Are The Problems of Starting a Business?
Paradoxically, while there is a never-ending list of the reasons behind why a business ends in failure, the biggest challenge to start a business actually lies in only a few key points. That is – The start, the midpoint and the end goal.
The start is often the most challenging, as few are reluctant to take the leap of faith. Starting a business usually mean leaving your comfort zone. While your 9-5 might feel boring and tedious, it is ultimately a cushion and a comfortable realm. It pays your bills. You have structure to your life and time to time, you enjoy employee benefits. It is a passive way of living. However, this might not be everyone’s cup of tea.
The midpoint is the longest portion of your journey. It is where the gruesome griding takes place. If you step back, you are back to square one and you are likely never getting the time and money you have poured into the business back. If you continue to progress forward, you run into problem after problem as you struggle to stay afloat with your limited pool of resources. Yet no matter how tough it is, you never stop trying and giving up is not an option.
At this stage, you need to keep up with the cutthroat competition. In the ocean of competitors that are flooding the industry, you need to remain relevant in your marketplace.
Be Adaptable to Change When Things Do Not Work Out
The biggest challenge in starting up a corporation is being adaptable. Why do start up fail? Why do most entrepreneurs fail? What exactly happens to all these brilliant business proposals and ideas that have been built up?
Well, as simple as it sounds, sometimes, things just aren’t working out.
The question then falls to the specific details. For instance, exactly what is not working? And what do you when what you are doing is not working?
The reasons are simple, and the answer is even simpler. If what you are doing is not working, then change the way you do things. When it comes to business ventures, especially for startups that are relatively new, the people involved are often scared of change. Instead of being adaptable to change, they stubbornly resist it and cling to the past because that is what they are familiar with. Well, it does not take a genius to point out that failing to adapt is one of the quickest ways that you can fail at what you are doing.
Not pivoting away from a bad decision can be a detrimental move that will eventually ruin your business over time. Sometimes, a bad product gets pushed as your company’s flagship product. Or you end up hiring the wrong person. Or you made the wrong financial move and leveraged your company too much. These are all potential missteps that can deplete your limited pool of resources and lend your company in hot water. At best, your company’s reputation is ruined or, in the worst case scenario, you run out of money and time and your startup is over.
But running a startup does not have to be an uphill task that is impossible to accomplish. For starter, in the scenario when an idea proves too difficult to proceed with, it is time to rethink things. Here are some questions you can lead with to delve deep into the potential root of the problem at hand.
- Are there any business associates you have that will be able to help?
- Is there anyone in your immediate social circle that possess the skillsets you need?
- Is there anyone in your professional network you can reach out to?
Look out for help when you need to. In times like this, joint ventures are useful as they are a resource for you to tap into and brave through the storms. When you are struggling or when you are facing trouble, never be afraid to ask for help. There is no shame in deferring to others who have more experience and appropriate skillsets that can be used to solve the problem at hand. Not only can you learn a lot from them, these are also lessons that you may not necessarily be able to glean if you were depending solely on yourself.
Hence, it is important that you do not fear when you need to ask for help. Simply be genuine, honest and respectful when you are communicating with someone. Interact with others in an earnest and heartfelt manner – and others will likely reciprocate with the same sincerity.
How to Handle the Common Problems Faced by Small Businesses?
Everyone has this question: What is the step-by-step roadmap to start a business whereby I will not meet any failures or hiccups and have a perfect shortcut journey?
Here is where the bad news come in. Despite all the evidence, advice, and news you can read up on to try to forecast your next few steps in this long journey, no amount of preparation will prepare you for what is to come.
Experience is ultimately still the best teacher. Contrary to popular belief, it is actually failure that will teach you the most, not success. That is why, to receive the most out of this gruelling and challenging journey, an open mindset is crucial. Be open to change, be open to growth and most importantly, be open to failure.
To all the perfectionists and the anxious-ridden folk out there, there is only one answer – Take a leap of faith.
Love it or hate it, this is the path that awaits most entrepreneurs. Not all stories will end in happy endings. But you will never truly know if you do not try. For some of us, there may be more than one story that awaits us.
There are many pitfalls that can hamper a statup’s growth during the beginning phases. By staying focused on your vision and having faith in your beliefs while remaining open-minded for new knowledge, you are less likely to fall into these fatal pitfalls.
To find out more about marketing strategies to help make your journey a smoother one, check out our marketing concept articles here. Alternatively, if you feel that your company is ready to start building your digital marketing channels, book a free no-obligation consult with us for us to give you an SEO analysis.