5 Biggest Challenges Faced By Startups and Their Solutions
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We are going to discuss the 5 biggest challenges faced by startups in this post. People start the business with the aim to grow it big and achieve success with independence but they face challenges. Small business is very easy to start and some small business starters do find their way through by finding the right perspective and knowing everything it is to know about the business before getting into it.
A lot of people starting a small business tend to suffer the same fate when they are not fully equipped and ready for what the business is likely to demand or face especially during startup. They face a bunch of problems while starting a new business.
According to the US Bureau of Labor Statistics, about 20% of small businesses fail by the end of the first year, 50% go down by the end of the 5th year and 80% by the end of the 10th year. With that statistics, it is very important to do research about the business you are willing to start before getting into it.
In this post, we will discuss the 5 biggest challenges small business startups face when starting a small business and how to overcome them.
5 CHALLENGES FACED BY STARTUPS
1. FINANCIAL CHALLENGES FACED BY STARTUPS
One of the major challenges faced by small businesses during startup is free and easy access to capital. Most refinancing companies never want to approve capital for small business startups because of a lack of trust in the business.
According to US Chamber, Entrepreneurs say, ‘getting easy access to business financing is one of their top challenges.’
Finance is what any business needs to keep up with the necessary expenses and daily needs of the business. Due to the fact that startups have less capital coming in and more capital going out, they might have the need for refinancing to enable them to continue to move on till they gain more awareness and also get more customers.
Sadly, they are denied easy access to financing which can cause a temporary or permanent hold on the business. According to an interview conducted on small business startups, among the challenges they faced, financing was the most difficult challenge they had.
They said they had to figure out a way to fund the business by themselves and one said, he had to take out 2 mortgages on his home to get the money he needed.
Although both small and big startups find it hard to gain easy access to capital, it is even more challenging for small and minor businesses.
How To Raise Funds For Business
- Microloans: Microloans are referred to as instant help loans. Although the capital might be small, it can serve as urgent help for capital needs in starting small businesses.
- Crowdfunding: If you have a strong business idea, you can ENHANCE the power of the internet to generate the funds needed for a startup. One can register on sites like GoFundMe where some powerful investors are willing to fund businesses with brilliant ideas.
- Entrepreneurs: can also contact friends and families about their business idea and see if any is willing to help you may find one.
2. TEAM BUILDING/RECRUITMENT
The team of any business determines how far the business will go. Finding the right and dedicated team members to recruit is not very easy during startup and it’s really frustrating because you’re not exactly sure what complementary skills to look out for at that time. It is one of the most common startup challenges.
Building a dedicated team for startups is much more delicate than hiring staff for an already established business.
Teams are the backbone of any business and startups lack the specific knowledge and business expertise to find out if an applicant is really a good fit for the position.
How To Solve Startup Hiring Challenges
Try reaching out to your industry experts and ask questions on recruiting. Learning the skills for a specific position is a better option.
3. GETTING AND RETAINING CUSTOMERS
If you’ve ever started a business from scratch, you’ll agree with me that this is one of the most frustrating challenges for small business startups. What to do to get customers, how to attend to them so they can keep coming back for more, and how to penetrate the mind of potential customers.
Customers are the lifeline of any business. If there is the capital and every other need present but without customers, there will be no inflow of cash and therefore the business will be found wanting. Your product or service should solve the customer’s problem so your business will surely shine and you will not face the common startup business problem of customer retention.
Getting new customers for any business takes time and hard work but it’s even more challenging for small business startups. Sometimes this is one of the biggest challenges faced by startups.
How To Get New Customers
- Try working on your price to bring your product to the nearest minimum so potential customers can consider trying it out.
- One of the best ways to get new customers and also retain them is by having a list of potential customers. Have them signup to your list for a free gift or have a list whereby they can give their details in exchange for free gifts. This is a more sensitive way to get customers and retain them.
- You also have to try as much as you can to penetrate the hearts of potential customers. The former is you, what you have to go through to get the customers and the latter depends on what you are offering.
- Do monthly promos and giveaways just to draw your niche market’s attention and then save the contact of anyone who’s interested.
4. BRAND AWARENESS
Building a new name to get known takes a lot more than anyone can imagine, even up to a decade. Small business startups struggle with getting their name known and most of them drown while still trying to get their name out there.
The reason is that a lot of people lose trust in new brands as 9 out of 10 small businesses go down with time.
How Can Small Businesses Increase Brand Awareness
- Do giveaways, like buy 2, get one free, just to draw people’s attention to your brand.
- Try bringing your product price down to the nearest minimum so customers can prefer your brand. Knowing that the more people purchase from your brand, the more exposure your brand gets.
- Open a business page for your brand on Social media like Facebook and LinkedIn. Spend time updating and targeting your niche markets.
- Get a blog or website for your brand.
Read: How Digital Signage Network Can Increase Brand Awareness
5. MONEY MANAGEMENT IS ONE OF THE BIGGEST CHALLENGES FACED BY STARTUPS
The biggest challenge faced by startups is money management. Most small business startups find it hard to manage money. They are ignorant of the advantage of accountability and so they can’t tell when the business is lacking.
Small business startups lack the fact that the future of any business lies in the overall spending, most especially during startup.
It is very important to know your numbers, from the highest spend that costs thousands of dollars to the lowest which costs just a few bucks. In that way, you can tell when the business is lacking and when to cut down on spending during startup.
How Do Businesses Solve Money Problems
- Get a note specifically for the business and write down a breakdown of every detail of how money goes out daily, even to the can of water that costs just a few bucks.
- Make sure to run a daily routine check on the business.
- Cut down spending when needed, most especially during startup.
- Employ only the services which you actually cannot afford to do by yourself and try as much as you can to give the business your best shot at the first stage. You can always employ more workers as the business progresses.
Conclusion:
Starting and maintaining a small business can be very challenging or even discouraging. Every business startup faces the same challenge and so, you are not alone. When equipped with information(s) regarding the business, you will be able to overcome any challenge you might face when starting a small business.
Glory Edet is a content writer, copywriter, and blogger. The CEO of GloweyGlobal. If you think business, finance or digital marketing, then I’m your writer. Connect with me on LinkedIn www.LinkedIn.com/in/gloweyglobal