Startups face a tough road to becoming established, successful small businesses. According to a recent Startup Genome report, roughly 90 percent of all U.S. startups fail. This feels like a warning to founders who face development issues that business school may not have prepared them for.
From building the right business idea and raising funding from venture capitalists to cash flow struggles and picking the right management team, here are some startup challenges and ways you can overcome them to build a more successful business.
New business scalability
Before your new venture starts growing, you need to have a sense of how quickly or slowly you can grow. It’s important to know what you need in terms of revenue or funding to reach a scale where you can become profitable. Business owners should address all of these factors in the early days.
A well-defined business plan can help track product development and the potential for growth. This includes audience interest, economic conditions, and market acceptance. The budget you’ve built into your business plan can also direct how to thoughtfully spend the funding you have by prioritizing the most critical outlays and connecting spending with the most important results.
Business model structure
It might be hard to identify a business model structure for your startup when it’s just you and perhaps a cofounder. But you have to develop a formal organization for future team members and the management team.
The early-stage structure should show roles and responsibilities and the beginnings of various departments that will eventually make up your company. Your developers will become your IT department, while your social media, email, or content staff may eventually join your marketing team.
Besides creating an organizational chart, lay out how each group works together, specifying roles, reporting processes, and responsibilities. Having this in place before you build out the business helps maintain organization and direct those joining the firm so they know the business’s processes and roles.
Small business team
Your startup success may depend on whether you can find the right people with the right skill sets and mindsets to join your team. Their knowledge, expertise, and passion about what your business represents play an integral role in everything from meeting deadlines and solving problems to satisfying a market need.
To find talent that fits your values and vision, envision the type of people you want and what they stand for. Since you can’t do everything as a founder, identify skills gaps to fill going forward.
Think about what type of role each person you consider hiring can play as the company expands. Look out for strong decision-making skills and whether a larger role could fit certain employees in the future. This can help you retain good people rather than waste precious resources to make new hires.
Startup company culture
Without all the formal trappings of a company in place, you may think you don’t need to work on culture. However, successful entrepreneurs build their company culture even before they have a team in place because it helps determine how people work together. Also, culture can heavily influence team motivation and belief in what the company is creating.
To start building culture, write down what type of working environment you want to create for your team. Describe the values and beliefs that match your vision for the company and should be promoted. Connect messaging and actions that emphasize that culture, and find ways to implement them through your interaction with each person who comes on board.
New business brand values
Know what your brand will look like and represent even before you launch it. Having a clear picture of your brand will guide your marketing efforts going forward and provide consistency across all marketing channels so the audience gets the same perception of your brand. The values that define that brand should also align with your intended target audience.
When creating your brand values, it’s important to tie those values to the actions you plan for the business. For example, if you want to showcase an environmentally responsible brand, the bulk of your business development activities must reflect that value.
This means having environmentally friendly products, manufacturing processes, materials, and vendors. If company leadership doesn’t make connections between what they say the brand represents and what they actually do, they can’t create a credible, authentic brand. At that point, winning audience trust will be next to impossible. Each of these business development issues can be challenging. But creating a comprehensive business plan that addresses each issue through research, strategy, messaging, and tactics, will make it easier to get traction and achieve success during the conception, launch, and management of your small business.