It’s a great time to be a start-up. Thanks to the internet it’s never been easier to set up, run and market a business. Meanwhile, the UK has a vibrant community of investors who are lining up to fund the next big thing. However, while start-ups are often powered by ground-breaking ideas and energetic teams, they lack the institutional knowledge of more established firms. So, what are the key challenges that start-ups are facing?
As with any business venture, it’s crucial for start-ups to think ahead and develop plans and strategies. One simple exercise we recommend is making a list of all the reasons your business could fail, then thinking about how you can manage that risk.
We’ve put together our own list of the biggest challenges facing new businesses based on our extensive experience of working with start-ups.
Lack of experience
Many start-ups lack experience almost by definition. They’re often helmed by younger innovators at the start of their business career. So how can you make up for this lack of practical experience? Firstly, use common sense when you make choices. If something smells fishy, it probably is. Secondly, surround yourself with smart people armed with expertise in your industry. Ask for opinions, ask for help. Do not assume you know everything.
Financial limitations
It’s normal for start-ups to operate on a shoestring budget at first, and you’ll need to learn to manage your money expertly. Always bear in mind that an expenditure may end up being larger than first forecast. A good rule of thumb is to budget for 20% more than quoted for a product or service. Always keep some money in reserve: it’s better to be safe than sorry.
No standout idea
Another big challenge for start-ups is defining your company’s idea and identity in the marketplace. An idea for a product or service has to have a narrative and a context. It has to fit into the existing market and provide value to customers. The best way to test whether your start-up idea fulfils these requirements is to look at it from the customer’s point of view: what do they need, and how does your product or service meet that need?
No management skills
Many start-up CEOs will be first-time managers. There’s a lot to learn about managing a company, from recruiting, training and motivating your team to setting strategic goals and establishing processes. Our advice is this: when you don’t know something, either learn it or pay someone to do it. If you only have to do it once, bringing someone in can be an effective solution. If it’s something that’s going to come up again and again, it’s better to learn how to do it yourself. Bring in external expertise that can come onboard with your start-up for a short period to execute a project, or establish a longer-term partnership that allows you to learn from experienced consultants until you’re ready to go it alone.
Fear of failure
When you start a new business, it can seem like obstacles and failure are lurking around every corner. However, you can’t afford to let fear paralyse you. Take a practical approach by analysing potential problems and how they might unfold. Use all the data and intelligence at your disposal to get a concrete, accurate picture of the situation. Once you have a detailed understanding of potential challenges, it’s much easier to manage or eliminate them.
Aversion to hard work
A start-up isn’t the best way to get rich fast. It’s a lot of hard work without much of a reward at first. Expect to work long hours: evenings, weekends, 70-hour weeks… But it’s crucial to remember that all of the energy you plough into the company will pay off eventually. With our tailored start-up strategies built on data and cognitive science, we can help you to work smart, not hard.
BRIDCON is a business and management consulting and advisory company. They model businesses and create sales and marketing strategies that help companies start and follow an exponential growth curve.
Gabriel Barcaru, Managing Partner - BRIDCON
https://bridcon.com/