According to Forbes’ statistics, 90% of newly started businesses fail. This is the harsh truth, but optimistic entrepreneurs need to know the reality before they dive into launching their business. Studying these cold statistics will encourage them to work smarter. What are the problems facing startup companies? In this article, we highlight 5 problems entrepreneurs can have when they start a new business. Being aware of these challenges will make the management and maintenance work much easier.
1. Business Idea Issues
For first time entrepreneurs, it’s important to come up with the right business ideas. Don’t go too big, or try to open several from the start. It is good to be ambitious, but you have to go step by step to achieve your business goals. Also, it takes time and experience to recognize good business ideas. Usually a business idea is very personal and time sensitive, but don’t rush into the decision making process and take enough time to choose the best one for you.
2. Money Management / Lack of Finances
Having enough cash flow is important to stay in business long term. Entrepreneurs must have adequate capital and be able to generate extra reserve cash for emergencies. Growing a business is impossible when you run out of cash. Don’t hesitate to get professional help if you don’t have enough knowledge about financial management of your business.
3. Marketing and Customer Loyalty
All businesses need a marketing strategy on how to reach target customers. There are many social media and communication channels you can use to send your messages out, however it’s important to figure out the channels and messages that best suit your business. Once you get new customers, the next step is to make them loyal to your business. Business owners need to figure out how to keep current customers, and how to reach new customers at the same time.
4. Legal Questions / Regulations
Environmental and financial policies change often and it’s always a concern for companies. Be informed of the regulations and tax policies in your industry, and develop the skills to deal with it.
5. Finding The Right Staff
The right person can help a business succeed. Choosing the right people for the job is a difficult process but by setting the goals beforehand and establishing the right culture, your business will be in a better position to achieve set targets. Especially in small companies, each member’s personality and skill is more important than in big companies. Find the right talents with the right skills. Focus on these aspects when you find your staff through staffing agencies or employment offices.
Know your own business and its challenges. Make a product or provide a service that meets the customer’s needs. Don’t ignore any part of your business and try to solve all problems. Balance the growth and the quality of your business. Don’t ignore your mistakes and failures. Analyze, organize, and recover swiftly. Be prepared for downsides of running businesses. If your startup succeeds, it means you are in the 10% that survived.