By default, most startups are quite unpredictable since they deal with products andÂ services that have no track records and a new market has to be created in a worldÂ where everything is changing rapidly. However, a huge percentage of startups barelyÂ survive the first three years of business.
If you want your business to survive the dark times, you need to turn the odds in your favor. This can only be done if you clearly understand all the potential traps so that you can know how to avoid them. Since there are several cross-cutting scenarios that can bring down any business, itâ€™s imperative that you get prepared in advance and know exactly how to deal with every situation.
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Your solution fails to address the problem as expected
Basically, most innovative solutions will take some significant time to perfect and problems will normally crop up when you least expect. For instance, itâ€™s common to miss the milestone and delivery targets which in turn slow down the rollout andÂ marketing strategy. When this happens, itâ€™s easy to find that most of the organizations supporting the startup are getting less enthusiastic about the solution and the cost mayÂ get higher.
While itâ€™s difficult to come up with an exact schedule when creating innovative solutions,Â you can make the process easier by planning well. When you have a comprehensiveÂ business plan and a well-thought product description, you can minimize the probabilityÂ of missing the deadlines. You can also involve experts when creating milestones as wellÂ as crafting recovery measures should the unexpected happen.
The market is constantly changing and you canâ€™t keep up
Irrespective of your conviction and belief that you have the right solution for the problem in the market, the truth is that you might miss some important aspects when working on the solution. This may be a result of market changes when developing and polishing your solution.
Basically, most startups are founded on the concept of change but itâ€™s not strange toÂ come across an entrepreneur who takes too long to adapt due to a burning passion orÂ outright stubbornness. If you want your startup to survive the turbulent winds of change,Â itâ€™s always wise to sufficiently assume that you will require to pivot somewhere along theÂ way. This way, you wonâ€™t be caught pants down when the need to adapt the solutionsÂ arise.
To be on the safe side, develop some metrics that will serve as a benchmark whenÂ assessing the overall progress of your plans. At the same time, make sure your team isÂ informed about new insights about the market and make the necessary adjustments toÂ your plans.
The financial resources get depleted sooner than expected
One of the grave mistakes entrepreneurs make is underestimating the operating costs and in turn, spends lots of time without thinking about where to raise funds for recovery measures. When you are running a startup, getting actively involved in managing the finances should be a top priority. As such, you should make sure that you handle the checks personally as opposed to having your accountant write them.
While there is no silver bullet when dealing with cash flow problems, you can minimizeÂ the occurrences by involving an expert when planning the estimated costs as well asÂ when managing all your receivables and payables. Itâ€™s possible for a startup to tumbleÂ down when a product is successful but there arenâ€™t enough measures to deliver theÂ orders.
Instead of waiting for the payment cycle to mature, you could take a business line ofÂ credit to help you address the uneven cash flow. The main advantage of these just rightÂ loans is that the creditor allocates you a certain amount that you can utilize. Unlike other forms of loans, lines of credit give you the freedom to take the exact amount you needÂ when you need it. To make the deal better, you only repay what youâ€™ve used in anyÂ given cycle.
Key people in your startup are not up to the task
All startups across every industry are heavily plagued with low motivation or lack of sufficient commitment among the crucial players. If left unchecked, this has the potential of decimating the whole organization. Therefore, itâ€™s always prudent to work on preventive measures rather than rushing to curative measures when the damage has already been done. You can do this by ensuring that your hiring process is meticulous with special attention to experience as well as commitment.
It would be wrong to rely on friends, interns, or family members to help you handle the crucial parts of the business. While they may offer you a good price for their services, you will be surprised by the fall out when push comes to shove. When human resources issues crop up, a good leader will promptly look for a solution rather than postponing the necessary action.
The marketing strategy falls short of the expectations
Irrespective of how innovative your product is, youâ€™ll need to put lots of effort to createÂ and execute the right marketing strategy to gain attention. One mistake that you canÂ make is assuming that your audience automatically shares your vision and passion forÂ the great solution youâ€™ve created.
While your inner circle may understand what you are trying to accomplish, you need toÂ use a suitable marketing plan to reach your audience. For a business to succeed, youÂ need to come up with the relevant measurements to gauge the success rate of your marketing plan, otherwise, you may be spending money where it is least needed.Â Instead of acting when no one responds to your marketing campaigns, involve an expertÂ when creating the marketing strategy.
If you ask an entrepreneur who has been in this game for a long time, they will tell youÂ that entrepreneurship is loaded with surprises. However, the business will only survive ifÂ you are capable of overcoming the various challenges on the way. Since most of theseÂ stumbling blocks are known, itâ€™s better to prepare in advance rather than trying toÂ recover from devastating blows.