The fact that 9 out of 10 startups fail in less than five years after their launch is the best indicator of just how dangerous the business world really is. While there are some things that you’ll never be able to predict and avoid, there are some mistakes that keep repeating themselves over and over again. Being ready to face them might make a difference between business success and failure. After all, the first step in avoiding a trap lies in knowing that there is a trap, to begin with. Here are several startup challenges you’ll face sooner or later.
1. Idea validation
The first reason why businesses fail is the fact that the idea was bad from the very start. Look at it this way, for an idea validation to work, you need to have an outsider’s perspective on board. Also, you need to make a close examination of the market and be realistic about two things. First, you need to be honest about just how much your audience needs your product/service (how high it is on their priority list). Second, you need to be honest about whether you have a unique angle to offer to your audience. Why would they buy your product instead of going to your competitor?
2. Trying to micro-manage everything
At the moment, you might be able to micro-manage everything, yet, once your workload increases, the number of your staff members grows and your business doubles in size, will you still be able to do this? Sure, you can pivot once this moment arrives, however, this is not something that you can rely on all the time. It’s much better to start building a team that you trust and give them a certain level of autonomy, just so much that you’re not the one doing absolutely everything.
3. Inefficient management of your finances
Managing your finances is a complex issue that most first-time entrepreneurs aren’t ready for. Even people who handle their own taxes and decide to run as a sole proprietorship (which is not such a good idea, to begin with) might be stunned by the amount of work there’s to do here. This is why it’s simpler and more reliable to outsource to professionals like Pherrus Financial Services and have your finances handled by trained and seasoned professionals. Just by having expert accountants on your side, you’ll drastically increase your odds and make your chances of survival that much greater.
4. Cash flow problems
The reasons why we have a second finance-based problem on this list is due to the fact that finances are, by far, the most common reason why so many small businesses fail early. In particular, their inability to properly handle their cash flow might be the single biggest concern and the single biggest problem in this field. In order to avoid this from becoming a serious obstacle you need to A) make better financial projections, B) have a steady cash reserve or C) have a way to create a quick capital injection, if needed. The latter can be achieved through loans, factoring or pivoting your business model.
5. Lack of scalability and flexibility
The last piece of advice for you to consider is the way in which your current business decisions may impact your business in the nearest future. In these scenarios, there’s one question that gets you out of the majority of these situations – is this solution scalable? Scalable solutions benefit your operations double-fold, seeing as how they can seamlessly increase your workload, as well as diminish it once the business starts growing slower. This is particularly useful in industries where there’s a notable difference between the peak of the season and the rest of the year.
Similar actions usually give similar reactions, which is why first-time entrepreneurs all over the globe tend to repeat the same mistakes over and over again. The funniest part is that this happens across industries, business hubs and states of the market, meaning that these problems are much more deeply rooted in the system than most people believe. Sure, it’s impossible to avoid them but in some cases, it’s for the best to just prepare for this eventuality. Sometimes, this will be the only way for your startup to survive, thrive and prosper.
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