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  • Swapnil Dalal

Startup Challenges


Entrepreneurs create Jobs. Entrepreneurs bring Innovation. Entrepreneurs contribute to National Economy. Entrepreneurs generate Investments.

As CEO of Meduyojak which is a Business Networking Platform, I keep on meeting entrepreneurs every day. Some of them are well established while some are startups with dreams to make it BIG. I also meet or speak to people who are working in corporates and are contemplating about starting their own business. They always enquire about the challenges a startup faces. I am writing this article to just highlight some of the typical challenges faced by startups. However I believe that all these challenges can be overcome if they work smart during their foundation days.

Starting up your own business is quite complicated. Startups have to face lot of initial challenges till they establish themselves as successful business owners.  An old saying goes ‘A smooth sea never makes good sailors’, similarly an entrepreneur’s journey towards success is never straight or smooth.  He has to face and withstand plenty challenges to become a successful businessman.

Nearly 90% of startups fail before end of three years.

There are many reasons why startups fail.  Here are few major difficulties faced by budding entrepreneurs while starting up their new ventures:

Entrepreneur Training

Most entrepreneurs start business in an area in which they are technically competent. But knowing a subject technically well is different from doing a business in that area. Hence it is very important to get trained in various facets of entrepreneurship.

Insufficient early stage capital --- The majority startups fail because of the lack or inadequate cash.  In order to function, businesses need a good share of money. Startups usually have trouble finding the resources to start. There aren’t enough channels which open up capital to new startups.  Getting a bank loan is not easy. Trying to convince investors that your business is worth their money is a herculean task. Besides, in most of the cases, entrepreneurs borrow money based on their ideas of business, instead of borrowing for a worst-case scenario.  Without adequate cash flow, a business can end before it gets chance to gain its momentum.

Weak Execution of ideas. --- Entrepreneurs have lot of innovative ideas. But to execute them in planned manner is very important. Bhavish Aggarwal, Founder of OLA cabs, says. “It’s not about ideas; it’s about making ideas happen”.  Often entrepreneurs are too optimistic about how easy their ideas will bring them the flow of customers. Initially the customers get attracted by their ideas but later it becomes difficult or expensive to acquire customers.  Most of the startups fail due to weak execution of ideas which leads to internal changes, conflicts, disappointments and finally shutting down of the business.

Many startups falter due to lack of proper business plan that include the key areas like sales, development, shortage of supplies, funding, etc.

Manpower -- Finding the right people is also very difficult. Startups require the right kind of people to come together for the business to withstand challenges and grow. It is crucial to search people with great balance of ability and attitude that your business requires.  It takes a huge amount of time to sift through people who don’t meet the bar. Delays in finding the right employees will result in delay in rollout of new products/services. This hampers the productivity and capacity utilization. Employee retention is also another challenge for startups.

Family Pressure--   An entrepreneur has to face the family pressure. Most often no one in the family is willing to let you be an entrepreneur. It is mindset of most Indian Families that everyone wants you to be in good service and not take any risk. It is even more difficult if you are starting the business by resigning from a senior position in industry. Even family gets used to salary being credited beginning of every month. They are also used to going on family vacations.

Do all alone  --  Initially an entrepreneur has to all the things alone.  Most of the time it starts by lifting shutter of his office and also closing the office. They are not aware about team development and delegation. This results in their business being constrained by their own capacity. Their business halts if they don’t work themselves. This results in them doing a job in their own business.

Competition  --  One of the biggest challenges that startups face is competition. Although your product/services being great, you have to keep a constant eye on what your business rivals are contributing in this crowded marketplace.  Having the right strategy and adapting to the new reality will decide your survival in this world of business.

Less marketing/sales  --  Many startups fail after the launch of their product/services . One of the most important areas every entrepreneur should concentrate is Marketing and Sales. It is observed most of the time entrepreneurs are involved in technical work as they are passionate about it. Marketing and sales which is the fuel for the company is ignored many a times.

Marketing a startup--  It is quite different than marketing an established business.  As an entrepreneur, you do not have any brand recognition, your budget is often limited and most importantly, you are dealing with your potential customers in an intensely competitive atmosphere.

Managing Cash Flow – For a startup, everything is to be organized.  Locating and developing new office, hiring new staff, product roll-out, etc. everything require proper working capital management. Startups generally do not get credit from their vendors but end up giving credit to their customers. This brings stress in their working capital management.

There is a huge amount of hard work, sacrifice, patience, emotional and financial stress that comes during the journey of an entrepreneur.  By knowing and anticipating the obstacles during your journey of entrepreneurship, it is comparatively easier to encounter them by preparing beforehand.

I am sure that with proper planning, training and strategy all the above challenges can be overcome.

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