The 3 Greatest Challenges of a Startup
CEOs share their first major struggles when starting a new company
Creating your own company is an appealing idea nowadays. The owners of the 581,000 startups created in the UK in 2014 certainly agree. However, how many of those will make it through the first five years of operation? Statistically, about half and according to Fortune magazine, nine of out ten startups fail altogether.
Learn more about starting your own company from the best blogs about entrepreneurship.
In order to avoid being part of this grim statistic, one might want to look to the 10% of startups that have successfully avoided the pitfalls and overcome the challenges they’ve faced in their early years.
We’ve asked CEOs and founders of prominent online startups from different industries about their experience with running a business and what they thought were their greatest struggles so far. They unanimously agreed on three main problem areas that evidently affect startups of any shape and size.
Any startup needs initial capital to build out their concept and get off the ground. Finding the funding can be done through angel donators, incubators and accelerators like 500 Startups.
Managing your finances, however, is a different kind of challenge.
Chee-Hyung Yoon founder and CEO of Virect advises “Learn how to survive on a lean budget. Staying lean gives you a much longer runway and better chance of taking off.“
Running a lean company can provide you with the cost savings you need in order to concentrate the financial flow on the survival and prosperity of the business.
Goran Duskic, founder & CEO of WhoAPI Inc., elaborates further by saying:
"...it's important to track your expenses like your startup's life depends on it. So, spend less than you earn, don't take debt and flip that $1 three times before you spend it. Instead of spending $4 on a latte, invest $3 in Google AdWords and get 3 leads to your website and cook cheap $1 coffee. Notice I didn't write "don't buy coffee", oh, you are going to need a lot of coffee."
Indeed, tight budgeting is not about depriving yourself of essentials. It is about finding the balance between your needs and the company’s needs.
Market/Product Fit and customer communication
Any successful entrepreneur will tell you that a company doesn’t start with a product, but rather a need. Trying to work the other way around, by pushing a product that you believe in, but in reality there’s no need for, is the fastest way to go under.
"It’s easy to get trapped in your product and not meet a single customer until you launch." Chee-Hyung Yoon
You might wonder “How can one make such a mistake?”. You would be surprised how many companies state that as their reason for failure in their post-mortems. It may be due to unwillingness to listen to the customers and adjust the product so it fits their needs better, or it may simply be due to non-communication with the target market.
"In the age where lean startups and minimum viable products are becoming mainstream, it is surprising to still hear teams spending years building products without talking to users and then find out no want the products." Weiting Liu, co-founder and CEO of Codementor
"You need to focus on solving a particular problem, for a particular customer segment, and in order to do that, you need to communicate a lot with your clients and your leads. This will help you to learn what problems are worth solving, and what problems you as an entrepreneur want to solve. In other words, communication with clients will help you find your "why". Goran Duskic
"If you can't produce a product that people care about then you really don't have a business. So P/M Fit literally means what you do is what the market wants (they "fit" together). Until you get P/M Fit then really you just have a hobby." David Jones, co-founder and CEO of Streethawk
These CEOs are adamant that meeting with potential customers, discussing their needs and showing early prototypes of what you’re building (and doing it often) is the only way to make sure you are on the right track.
Running your own company, as liberating and exciting as it may be, can be straining, especially when the problems start piling up or you find yourself far from where you thought you’d be at a certain point in time.
"Most startups die because of suicide, not homicide. I've seen tons of teams die because of early founder breakups, or the founders getting demoralized themselves. Startup is a grueling process." Weiting Liu
Some claim that anything else can be overcome and even though various struggles can help derail a company, the end of a startup truly comes when the CEO gives up and loses their spirit.
"It can take years to build a product, develop software, or even launch a website." Chee-Hyung Yoon
"Very often during the first few years, you will ask yourself: "Is it worth it?", "Why am I doing this?". So you better arm yourself with some grit, and find a great reason why in fact you really want to make this happen." Goran Duskic
"Most entrepreneurs are hopelessly optimistic (I am!). Optimism is great but the founding team needs the resilience to take daily gut-punches and just keep going." David Jones
Patience, discipline and persistence are just a few of the personal qualities of a successful startup CEO.
We hope these insights, kindly provided by our collaborators, will help you steer clear of the most common pitfalls for entrepreneurs and their startups.
Founder & CEO at WhoAPI Inc. - a platform that turns raw domain data into machine readable outputs. We make it easy for our clients to monitor their websites, protect their brands, invest in better domains and act faster on various domain related threats.
CEO of Alumnify - an alumni engagement company that turns recent graduates into lifelong donors using custom, white label, and highly interactive mobile applications for alumni
Founder and CEO of Codementor - an instant real-time help marketplace for developers. We are making it easy for developers to get instant help from experts via code/screen sharing, video, and text.
Founder and CEO of Virect - a leading marketplace for video production that has been ramen-profitable for the past four years. Video is the most effective and watched medium on the planet and we facilitate businesses to get great videos in a cost effective manner.
Co-founder and CEO of Streethawk - a platform that takes the guesswork out of Mobile Engagement Automation. It provides analysis of App Usage data & combines it with best practices to deliver insight driven recommendations & real-time push unique to your App & User.