Startups have become the engine of modern business environment, which are fueled by many creative and smart individuals who gather around and come up with technologically advanced and innovative solutions to solve problems faced by prospective customers. They are aimed at building innovations by challenging and disrupting traditional and conventional systems. Unlike traditional corporates, they aim high, even though the chances are that their idea might not work. There are millions of startups worldwide with many millions launching every year. However, not many startups tend to survive in this fierce competition. Some succeed while some turn into oblivion in their very first year. “Survival of the fittest” is not just a phrase relevant to humans alone. It is quite true for startups also. E-Retail services have been the most chosen sector of startups in the UAE.
A startup is, after all, a business that faces many challenges as it continues venturing into its chosen industry. With this article, we aim to shed some light on 4 of the most common challenges or issues faced by business startups during their initial stage of development with the possible ways to solve them.
1. Business Planning
Strategic business planning is key for any business startup to get on their feet. Unfortunately, many startups failed in their early stages because of shortcomings in their business planning. Some startup owners do create business plans but turn out to be ineffective ones due to the lack of perspective, unrealistic goals, insufficient market research, impractical and unachievable targets in budgeting, etc. Thousands of business plans are created every year but only a fraction of them achieve the planned targets, objectives, and milestones. Even though these business plans were drawn up based on solid strategies and objectives, majority of them fail to achieve accomplishments as planned when it comes to the real-world implementation phase.
How to Solve it?
For startups, it is extremely important to have a business plan. It is a key determinant which decides whether your business will succeed in this fierce competition or not which should be backed by solid market research. It outlines the objectives and missions of your business, not dreams but realistic goals. It identifies your SWOT, potential problems and solutions, business models and highlights your USP and competitive advantage over other businesses. In addition, it addresses your funding requirements, financial forecasts, and other details. It is also advisable to draft an exit plan, which addresses the right time and strategy for an exit.
Many entrepreneurs are often bogged down when it comes to implementing strategic business planning. Thus, it would be advisable to have a business advisory partner who can formulate a comprehensive business plan for you to make your startup business a successful one.
2. Financial Management
One of the major and most common challenges that business startups face is managing their finances. The main reason behind the failure of most business startups is the heavy reliance on investors and venture capitalists (VC). Even with adequate funds, many business startups fail because of poor financial management skills. Many businesses fail to utilize and allocate the funds received effectively and eventually succumb to the pressure. Meanwhile, some borrow funds on the assumption that their business plan will be successful, rather than borrowing funds for the worst-case scenario. As a result, many businesses end before it gets a chance to gain momentum.
How to Solve it?
Managing day-to-day finances could be a tedious task and also stressful. Thus, it is advisable to get an extra pair of experienced hands to come and aid you in making better financial decisions. At this stage, hiring a financial consultant will likely be more cost-effective than recruiting additional staff. The expert advice of financial advisory services provided by business consulting platforms will help you align your cash flow with your business goals more efficiently and effectively. In addition, it will also give you a ‘second opinion’ on your current financial decision-making parameters.
3. Recruiting Candidates
It is of paramount importance that a startup business hires individuals that contribute to the company’s vision. As the company is in its early-stage and have a limited cash flow, hiring the wrong employee could make it worse. In general, startups find it harder to recruit great candidates, as the former are new and might not have much traction in comparison to already established organizations. Many businesses suffer immensely due to the lack of a dedicated team. Picking the right combination of a team for a startup that understands the company’s vision and long-term goals can be demanding. It can be a stressful experience because you have no idea how your team will work together. With the wrong workforce, a company will never achieve its goals.
How to Solve it?
While recruiting, look beyond resumes and qualifications. Every business requires a specific skillset that will aid in its growth and success. That said, you must not recruit candidates that do not fit for the job, regardless of how experienced they are. Also, hire people who have a diverse skillset and background. Having diversity makes it easy for individual employees to work together and concertedly contribute to your company’s success.
4. Competition
In the business world, competition is an inevitable challenge that most business startups usually have to face. In fact, they struggle at both fronts: one from monopolistic companies that are dominating the market and another from other startups that are emerging regularly in the market. The biggest hurdle for a startup to succeed is to gain victory amongst these competing firms which is not an easy one as said.
How to Solve it?
Many take the competitive nature of business as a bad thing. But, according to Nancy Pearcy, an internationally acclaimed author, “Competition is always a good thing.” It is because it makes us push our limits and force us to give our best. As long as you are not copying products or services of other companies and have a distinct USP from your competitors, tough competition makes your startup step out of its comfort zone, striving to create innovative and better products and services despite being in a fierce and cut-throat market.
Always strive to capitalize on your strengths. Do not copy your competitors. Customer service should always be your top priority. No startup company started with a huge consumer base. All of them had to work their way up from the bottom. Positive word of mouth from happy customers can take a startup from rags to riches.