10 Problems Startups Face


Entrepreneurship is more popular today than ever. However, anyone launching a new startup should prepare for the road ahead.

Running a Startup is No Walk in the Park

Becoming an entrepreneur is more popular today than ever before. Just a few decades ago, few people would have wanted to go through the trouble of starting their own business. Now with the widespread adoption of the internet, starting a business is easier than ever before.

With this new boom in accessibility to information and resources, a slew of new online businesses have risen. Add to that the fact that companies like WordPress, Amazon, eBay, and countless others are making it easier to set up the basics.

Anyone interested in clothing and fashion, technology, construction, real estate, or any other sector can set up and run their own website. So long as a person is willing to adapt to a changing market and learn on-the-go, entrepreneurship is a very real possibility.

Yet, many are jumping into it with a “hobby mentality”. Meaning, they feel like they can start something on the side, while keeping a job; or maybe they think they will have more free time and control over their life by becoming one. While this is a perfectly normal way of going about it, it can also mean there is a potential lack of passion, drive, and experience in the many different skills required to get the job done successfully.

For anyone serious about making a career change and pursuing their own business, it’s critical to understand some of the impending roadblocks. If you’re considering starting something of your own, make sure you’re mentally prepared for some of the issues that could arise along the way. As the old saying goes, “forewarned is forearmed.”

1. Product Validation

It is absolutely essential that you make sure your product is going to sell. One of the greatest mistakes new entrepreneurs make is assuming their idea is the golden ticket. Sure, who wouldn’t want to be the founder of a million, or billion, dollar company? Being the next Steve Jobs or Jeff Bezos sounds exciting but it’s also a one-in-seven-billion chance.

Market research is key. Don’t take it as an optional part of the process. Nor should you take it as homework you have to do that automatically guarantees success. Make sure you’ve reached out to your target consumer and have confirmed your product is in high demand. Also, make sure you understand who your target market is so you know who to ask.

Failing to do this might end up in your having a fantastic product that nobody wants to use. It’s like designing the world’s most beautiful flip phone: you might have an outstanding product, but everyone’s using a smartphone.

Avoid investing time, energy, and funds into a product that doesn’t have a future. Validate your product. Ensure there is a demand for it and that way you can ensure you have clients waiting when you’re ready.

2. Bad Corporate Structure and Absent Delegation

At the beginning, most lean startups try to assume less risk by starting with a low budget and minimal staff. That’s great for starting up but eventually, if everything goes according to plan, the company will start to grow. Though this seems logical, most startups fail to plan for growth by developing a proper structure for their company.

It’s not enough to have a good idea, you need to make sure you have a way to implement and scale it. Managing finances, human resources, production, customer relations, etc. are all things that need to go into the plan.

The best way to do this is by hiring people that know more about what needs to be done than you do. Relinquishing certain responsibilities isn’t easy at first. New entrepreneurs tend to want to have their hands on all facets of the company. Yet, they also need to be aware of their own limitations.

For example, managing finances for a small operation is easy at first. Once that begins to grow and you’re managing tens or hundreds of employees, however, it’s easier to have an experienced accountant and financial planner handling your books.

3. Reluctance to Change

Change is difficult but necessary. It can come in many ways, too. A shift in the company’s product, necessary layoffs, cuts in expenses, etc. Take Nintendo, for example. Their original product was playing cards. When they were presented with the opportunity of going into different games, they were reluctant.

Eventually, they knew the company needed a new angle and wouldn’t live much longer only selling cards. They migrated to toys and eventually found a place in the video games market. Could you imagine if they had passed on that opportunity? All the games that made up the childhoods of millions of children around the world would’ve never been made.

For big companies and small companies alike, it’s important to adapt to changing markets. Just because a product was in high demand before, doesn’t mean it will stay that way forever.

Change can mean making difficult choices and hard shifts. When starting a new business, it’s important to keep in mind that at some point the company’s angle might change entirely. As any professional boxer will tell you, “you have to roll with the punches.”

4. Planning a Budget

You have to spend money to earn money. Getting into a new business rarely comes without costs. Some online websites, blogs, etc. get away with minimal expenditures at first. Others require more up front costs for manufacturing, hiring, advertisements, etc.

Anyone launching a startup should create a plan that prepares the company for the predicted costs to come. Though at first it may not seem like there should be many costs, many business don’t see a profit. In fact, a good estimate for any company is to expect to earn profits only after two or three years of operating.

With that in mind, ensure the company has enough of a runway to be able to continue operations throughout this starting period. If you are starting the business alone, make sure you have a reliable source of income.

To prepare for this, many entrepreneurs begin their business while still working full-time or part-time in another company. Otherwise, they would have to rely solely on their savings and after a while it can become discouraging. Seeing money going out every month and no money coming in can lead to a growing fear of failure.

Planning a budget plan for the first two to three years can ease those worries. The company can prepare itself for the expected losses and plan ahead. Whether that means maintaining a job or finding some investors, it’s important to think ahead.

5. Conflicts with Partners

Let’s face it, it’s difficult to go at a new project alone. Often, entrepreneurs would rather partner up with one or more people to lighten the load. This collaboration helps to start off with a team mindset and can be very beneficial for some startups.

However, in some cases the founders might find themselves in disagreement about the company’s vision. One person might want to go in one direction while the other had a different idea altogether. In these cases the business can feel torn apart and it could ultimately lead to the collapse of the company.

That’s why some would advise against going into a business with friends or family. Though it would seem like an obvious choice, it doesn’t always go according to plan. It’s better to find associates that share the same vision for the company add a variety of benefits to the table.

Partnering up with someone who is good with operations and someone who is creative can help. Or, having someone that is fantastic at managing finances and making projections for the future. Regardless of the partners, remember that everyone should know, from the very beginning, where they are steering the company and have already discussed what to do in the event of conflicting opinions.

6. Conflicts with Employees

Conflict here might not be the best choice of word, yet the idea is that issues do occur within a company. Preparing for these at the very beginning can help create a stronger company culture. What benefits do employees receive; how are you going to make sure their opinions are heard; how will you prepare for the hiring and firing processes; etc.

Don’t assume a “we’ll cross that bridge when we get to it” approach will work. In fact, in most cases it doesn’t. A company is a professional institution and should behave as such. Rather than wait until a problem arises and try to find a way to fix it, prepare in advance.

How are you going to talk with your employees? How can you make sure to keep your employees informed of where the company is and where it’s going? Be transparent where you can and communicate well when you can’t.

Many conflicts arise due to miscommunication. Lead by example by asking follow-up questions, and putting other people’s ideas in your own words to see if there could be a misunderstanding. Catching these problems before they become seedlings is imperative for good flow, and good morale.

By ensuring that people are happy and feel comfortable in the company you can reduce turnover and build greater loyalty. Remember that the people in the company are also the face of the company. Make sure to keep them happy and they’ll convey that same feeling to the company’s customers.

7. Breaking into the Market

Unless you’re creating an entirely new product, you’ll likely find yourself in a sea of competition. It’s hard to invent something new so most entrepreneurs go into existing markets. How are you going to get your share of it?

Marketing efforts can go in vain if there is no clear path. Finding your target consumers, communicating with them, adapting your product to demands, and finding the best way for people to get to know your product are all key pillars to ensuring your success.

Like we mentioned earlier, don’t assume your product is a million dollar idea. It might be, but you have to make sure by getting to know your customers and allowing them to get to know you. Branding is all about reaching your target audience and creating a unique product that they can learn to love.

Brands like Nike, Apple, and Coca Cola have created more than just a great product. They’ve managed to dominate the market by creating a following of loyal customers. Their customers are so loyal that they’ll fight with others that disagree with their views.

Getting your customers to fight is not the end game, love for your brand is. When you can integrate yourself into the market and establish yourself as a brand people get out of their way to find, you’ve cemented your share and just need to focus on adding to it.

8. Setting Unrealistic Expectations

Elon Musk is famous for many reasons, one such reason is that he is “overly optimistic.” While some people might tell you that building a rocket and launching it into space could take decades, Musk assures his investors he can get it done in just a couple of years.

Anyone that follows Tesla or SpaceX can tell you that he rarely, if ever, hits his mark. More often than not expectations are led wildly short. Though many have grown fond of this ambitious timeline, most companies shouldn’t try to emulate it. Rather than create unrealistic expectations and set yourself up for failure, prepare a realistic timeline.

Creating a timeline or sales target shouldn’t be done off the top of your head either. Most projections use past data and are constantly changing. Make sure you understand your limitations and push the limits only where necessary.

Xerox famously employed a method in which they would set very low weekly and monthly sales targets. What would happen is that the sales targets wouldn’t just be met, they would be surpassed significantly. By doing this they would boost the morale of their sales representatives and ultimately hit much higher quarterly goals.

In contrast, many companies find that setting very high sales targets results in lower sales and an unmotivated sales force.

9. Long-term Vision

If you’re starting a company, make sure you’re in it for the long hall. Don’t create a company with only a month or a few months’ vision. By planning only for the short term, it’s significantly more difficult to prepare for the long-term.

A mistake many new businesses make is that they overestimate important facets of their company. Overspending, over hiring, or growing too fast can all lead to a business’ demise. Rather than plan for the next few months, plan for the next few years.

Once the company grows to a certain point, what will we do then? How big do we want the company to get? Is there a point where we would like to plateau to improve the company from within? Bigger is not always better; planning ahead and knowing exactly where you’re headed can make it easier to reach that objective.

10. Passion

This last one might seem a bit corny but it’s one of those “make it or break it” points for any company. Companies are long-term ventures. As mentioned above, you should prepare the company for what will come and have a clear idea of where you’re going.

Moreover, it’s not enough to know where you’re going on paper. Planning shouldn’t be something that looks good to investors. Any founder should also consider the fact that this new venture might turn into a success and what may come from that.

A company could grow so large that it outlasts its founders. Coca Cola, Pepsi, Mattel, etc. are all great examples of companies that have had several people at the helm. Don’t go into a new business lightly. Understand that a new business could be for a lifetime. Are you prepared to spend the next 10 or 20 years growing this idea?

Assessing your level of commitment can save you a world of pain down the line. Is this an idea you are truly passionate about and would like to see it grow? Or, is this something you’re doing to make a little extra cash on the side and hope to one day sell it off?

Knowing the answer to these questions will help you in planning your vision for the company. It’s ok to want to create something small, or to just want something that pays the bills. You’re not a bad person for wanting something small. If all you want is enough money to retire on a beach somewhere then just be honest with yourself and your partners.

The worst mistake a person can make is going into a new business to make money and then reflect that feeling onto their employees. The more you understand yourself and your motives for launching this new business, the better prepared you will be for the future.

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