The Biggest Challenges Startups Face Include Getting the Idea Right, Customer Acquisition, Strategy, Hiring, Culture, and Funding – Then Keeping it Going!
As someone that has run four different tech startups, including QuestFusion, and invested in or bought a number of others, I have seen a lot of the biggest challenges startups face in getting their businesses established. One of the challenges could be getting fantastic internet speeds similar to what M247 can better educate those who are looking to optimise their startup. But also in continuing to grow their companies into successful enterprises. As I look over the last couple of decades, there are a handful of key issues that all startups have faced, and I’ve tried to give you some of the best ideas that I have seen to mitigate these challenges.
Getting the Idea Right
Getting the idea right is an essential part of the entrepreneurial process, and one of the biggest challenges startups face. Before jumping right into your product or service, I think it is critically important to first dig deep into the problem that you’re trying to solve for your customers. Many entrepreneurs start with the solution, and have a sense of the problem they are solving, but don’t really dig deep into the customer-related aspects. You really need to answer these questions:
- Is this an important problem for the customer?
- Is the customer desperate to solve this problem?
- Is my idea vastly superior to the alternative ways this problem is being addressed?
Great entrepreneurs start with the problem they are trying to solve, and only then propose a unique and creative solution. If your idea does not have value to a customer, if someone is not willing to pay for it, then obviously you can’t build a business around it. Your idea MUST have a Unique Value Proposition.
Any kind of market that’s attractive will attract competition, even if you’re the first company to have a solution based on your idea. What is your competitive advantage and is it sustainable?
The final thing we’ll talk about with respect to your idea is the concept of idea refinement. You might have a great idea, but having a feedback loop based on interaction with customers in your target market will help you to refine your idea and thus make it even more valuable.
Customer Acquisition
People want to understand, “What’s in it for me?” Even in a corporate environment, there needs to be a “personal win” and a “corporate win” to close a sale.
Many technical founders would like to focus on the product, it’s features, and how awesome it is. While the product may be awesome, for someone to buy anything, they need to see the value for them, and be convinced that it is in their best interest to make a decision in favor of using it, whatever “it” is.
Before you can sell anything, you need to understand your customer. What are their interests? What are their problems? What do they lose sleep over?
The best way to understand these things is by asking open-ended questions. An open-ended question is one that cannot be answered simply by saying “yes” or “no”.
With any prospective “buyer” of anything, you should focus on user benefits, not product features. You should give just enough facts that allow the client to justify the decision. In other words, you need to first convince their “head”. Next, you need to arousing desire by pointing out the lack of benefits today and your solution filling that void. This is called winning over their “heart”. This may all seem like BS to you if you are an engineer or scientist, but I can guarantee you that you need to win the head and the heart to close business. You should use stories, word pictures, and analogies to help in the process. Even after you win over the head and the heart, you need to get a decision. This is the art of closing. If you don’t close the prospect, then you are leaving them in a state of indecisiveness, which is not a nice thing to do. If what you have has value, then you are doing your client a great favor by closing them.
Developing a Clear Strategy & Plan of Execution
Developing a clear strategy all starts with a clear understanding of your markets, customers, and competitors, and how you expect them to evolve over time is another one of the biggest challenges startups face. Next you look at a reasonable set of financial constraints and goals, and what you can reasonably expect to accomplish over the next few years with that set of constraints. Then you look at the “gap” from Point A, where you’re at today, to Point B, where you want to go over the next three years, and formulate ways to resolve those gaps. I cover this in detail in my blog post, Essential Elements of a Fundable Startup Business.
If you’re climbing a mountain or going on a long hike, then you need to understand the terrain; the likely obstacles and how much ground you need to cover to reach your goal. You need to plan-out your provisions. How much food and water will you need? What kind of clothing and shelter? That’s the same thing as a strategic plan in business. It’s not a super complicated thing but it does take detailed analysis. As Yogi Berra said, “If you don’t know where you’re going, you’ll end up someplace else.” That’s definitely been the experience of a lot of people that I know.
Strategy without execution is worthless and meaningless. As a leader of an organization, you need to provide alignment, incentives, and resources to the team. Just as important, you need to have a team that is passionate and believes in the idea. Zealousness is required to make a startup successful.
Building the Team & Culture
Quite often, one of the biggest challenges a startup founder faces is deciding whether to outsource work or hire someone to do it. For example, computers are involved in all aspects of businesses nowadays. But computers are technical, and they tend to go wrong. If your whole business is reliant on your computer systems, this could be a major problem. Do you hire someone to support your IT on the off chance it goes wrong, or do you look at getting computer help from a specialist company instead? When building your team, they must have the passion, focus and drive. Building a great team involves scouting, recruiting, hiring, on-boarding, and providing ongoing leadership, management and direction. The leader provides the ultimate direction, but listens to the team, the customers, and other key stakeholders.
Startups should make a concerted effort to focus on culture early-on in the life of the company. Having efficient software should help to make the work-life of your employees easier, like using software similar to what can be found at FilecenterDMS.com to work towards a paperless office and improve organization if that is a priority for your business. Make a conscious effort to create your culture because it is going to be created anyway. Both process-oriented/rigid cultures, and free-thinking/flexible cultures can be successful. Bottom line, companies want to get results, and employees want to have a place where they love to work.
There is a “what” and a “how” of corporate culture. The “what” of a good corporate culture starts with values and operating principles. The “how” is about the way that people in the organization interact with each other, the structure in which they operate, how people in the organization hold each other accountable, how they run meetings, and how they make decisions.
A culture builds with momentum. Find areas of common ground where the principles can agree. Start and build from there. You don’t have to have the whole thing figured-out in the beginning. Hire for talent, but also consider personality. You need to manage with fluidity and agility.
Raising the Proper Amount of Funding
As a leader, you need to look over the horizon and make sure the team has the needed provisions and support to do their jobs. You need to raise a sufficient amount of money to allow the team to do their jobs. There will be challenges and there will be adversity. If you have an office building, there will be costs to think about in terms of energy, such as heating the building and supplying electricity. To compare prices for Business Energy, simply click on the link.
Keeping it Going
Running a company is like climbing a mountain that has an ever-ascending peak. If you are successful, you will reach important milestones and reach amazing heights, but there will always be another mountain to climb. You need to constantly set new goals and maintain energy and passion around achieving those goals to continue to be successful. It is like getting to a new level of a video game. You have to keep the passion and excitement going and keep moving forward.
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.
Feature Image Credit, Woman Jumping A Horse Across A Deep Ravine, courtesy of John Lund Photography