5 challenges of a startup and their solutions from an experienced entrepreneur
It’s almost impossible to imagine a startup, which does not face difficulties on a daily basis. Thus, as a budding entrepreneur, you must know the challenges of a startup and solutions to overcome them so that you can be better prepared.
Keeping this in mind, Anurag Bhatia, an experienced entrepreneur, who is leading the fintech startup, Minance, has shared some challenges of a startup and their solutions. Anurag knows what it takes to run a scalable business, as through Minance he is managing asset worth $41 million of more than 3000 clients and that too without raising funds. Thus, he knows how to build a startup from scratch, overcome hurdles, and be profitable.
Here are five challenges of a startup and tips to tackle them from Anurag Bhatia, founder of Minance:
1. Unable to hire the right employees
This is always a problem for startups. When you are starting out, hiring people beyond your core team is hard; as many people see working for startups as a risk. On top of that, you are competing with industry giants for the same talent. Also, once hired, some employees find that it’s not their cup of tea, and intense work environment can see people leaving.
Solution: Startups can minimize these issues by hiring people who are persistent and have a disposition towards action. It also pays to let employees know that they are playing a critical role in ensuring the company’s success.
2. Co-founders incompatibility
This is a real challenge for a startup, which is aiming to scale up. Things are often easy when you just start working with the co-founders. But over time, you come to realize that you have different working style and psyche. Also, when you face failures and tough situation, there is a possibility that conflicts may arise.
Solution: I find that communication goes a long way towards resolving disputes and conflicts. It’s also important to divide up the responsibilities and trust the other person to get on with it. If there are different trains of thought, then go with the data and statistics.
3. Customer attrition
More and more startups are working hard to not simply satisfy the customers but delight them. As it’s quite easy to acquire customers, but it takes extra efforts to retain them for a longer period of time. Thus, as a founder of a new startup, you might face the challenge of customer attrition.
Solution: I find that customers who complain the most are the ones who care and it pays to listen to them. If you lose a customer, then try to get feedback and find out what went wrong. If it’s something you can fix, get back to them once you have solved the issue. Things like this will go a long toward making you a customer-centric firm.
4. Tight competition
Each sector is getting crowded with lots of firms trying to grow their market share. Thus, most of the time you will find yourself competing against a giant, either a well-established firm or a venture-capitalist-backed peer. One small mistake may clinch the contract or a customer from you, this is the harsh truth of the business world.
Solution: In such instances, it makes sense to find out what makes you unique and focus on highlighting that particular USP i.e. unique selling proposition. Sometimes you will find that you can collaborate with the competition and I recommend pursuing such opportunities. They will pay off, one way, or another. Also, lower costs alone, don’t appeal to customers, most are willing to pay more if the service is outstanding. So, it is imperative that you focus on this.
5. Communication gap
As a startup grows, the communication gap between founders and employees may arise and can make huge damage. When founders are busy in making the startup big, sometimes they forget to ensure that the company’s value and motive are reaching till the most junior positioned person. This may lead to low motivation in employees, which may reduce the overall productivity of the startup.
Solution: Knowing your team is extremely important. In a startup, a lot is demanded from everyone and they aren’t going to commit unless they know that you back them. Until the company hits a size of about 50, a founder must know who everyone personally and what they are responsible for.
Having said that, delegating leadership is a vital aspect, you can’t have 50 people reporting to you. As a leader, I find that the maximum number of people, who directly reports you should be 12. Also, as a founder, be careful when you are asking people to do something because they will drop everything they are doing as ‘the boss asked them to do it’. Instead, make sure to bring that person’s team leader into the loop.
What challenges do you face while running a startup? Do comment below.