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To Start-Ups: what are the main challenges you faced with when planning and starting your business?
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4 Answers
Mark and Steve make excellent points. Having been fortunate enough to have participated in 5 successful startups, the number one challenge that outpaces all others is *remaining focused*: knowing when to say no and turn down business that is outside the company and/or product's core abilities. The distractions in the early stages are threatening to the company's success.
The next 3 challenges I've seen are:
Under-estimating financing requirements / over-estimating revenue ramp
Team building. Get the right people with a relevant track record on board early. Successful teams are willing to admit mistakes quickly and adapt quickly.
Reinforcing a culture that constantly refines the product customer fit. The better the fit, the faster the revenue ramp.
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Craig Stouffer
Pinpointe On-Demand
http://www.pinpointe.com
The biggest challenge is implementing a strategy that builds visibility in your marketplace. Most start-ups lack the finances to do any heavy duty advertising so building a presence that conveys credibility and integrity can be challenging. Succeeding at this is what drives the revenue that funds the rest of the operation.
The next challenge I've encountered is taking the business from start-up to sustainable growth. Doing it all yourself usually leads to frustration and burnout, especially if the original business model requires a scope of business bigger than just the owner.
Of course, cash flow is a constant challenge that casues owners to keep tabs on expenditures or risk a financial bleed-out before they get the traction necessary to succeed.
Stay focused on building your business in stages, making sure each level reaches profitability before taking the next step that might require hiring people or renting facilities.
Several issues come to mind when helping start-ups.
-1- Not fully understanding our total addressable or serviceable markets (or overstating both). In both cases, that meant slower-than-planned sales growth.
-2- Conversely, when growing too fast, hitting ceilings of complexity and outgrowing the original management team (or even founders). Seems like after every $2 million, systems cave in, and we need to make processes smoother, better, faster.
-3- Similar to -2-, but lack of management experience leading to poor decisions, lack of focus on one or two core initiatives.
-4- Faster-than-expected cash burn rates--a killer.
-5- I rarely see this answer with a similar question -- family. Start-ups require time, attention, and luv. That means time away from spouses, kids, and close friends. Some start-ups are not prepared for 60-plus hour weeks, no weekends, or vacations.
-6- Wearing too many hats. Most CEO's in these start-ups have to do too much as resouces are scarce to splurge on overhead staff. That slows down growth.
I have more, but these are the ones that quickly come to mind.
Currently during this economic climate gaining good finance deals can be extremely difficult for startup businesses. It is vital new enterprises carry out an adequate amount of market research and have realistic financial projections before trying to gain any investment. A strong business plan should include all of this information and improve your chances of overcoming this hurdle
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