7 Major Challenges Small Start Ups Face—And What to Do About It Now
You've launched your start up. Your "paper napkin" dream is about to be realized. There are particular challenges start ups face. But how you respond to them will determine how successfully your business will roll.
Here are 7 major challenges that you should be aware of.
- Charging Too Little
A pitfall for new businesses is trying to beat the competition by offering lower or the lowest prices. Unless you're Wal-Mart or have suppliers lining up at the door (and around the block) to give you the prices you want, this strategy will not work for you.
Long-lasting relationships with suppliers, like trust, are built over time. Lots of time and many compromises. This can and will happen, but not overnight. The better strategy is to go for quality and customer satisfaction. Price your goods or services at a fair market value. Use what is known as "your unique selling position" to increase your client base.
- Increasing Profit
For small businesses and start ups, increasing profit is essential. Time and again, it comes down to remaining low-cost in comparison to the competition. Studies show that lowering your costs by 10 percent can mean an increase in profits by 50 percent or more, depending on your cost margin.
Crunch the numbers. Cut costs. Streamline.
- Raise the Marketing Bar
Gone are the days of cocktail and handshake marketing. Immediacy is the name of the game when it comes to marketing today. While nothing beats word-of-mouth advertising, raise the marketing bar through varied marketing techniques.
Take a look at each of your marketing efforts and see which is most effective. Online networks such as Facebook, YouTube, Instagram and Linked In give you an instant online presence. Get them to work for you.
- Managing Cash Flow
Money problems in all their many and varied forms seem to be at the top of the list when it comes to company woes. For start ups, these can range from unexpected or outstanding bills to major clients stalling payments. Good news! These things are more easily managed in comparison to challenges like product demand and other regulations. Cash flow issues are largely curable and within your power to control. There are solutions to improved budgeting and invoicing aplenty. The key is discovering the one that fits your need.
- Trying to Do Too Much By Yourself
You can do most of it but not all of it. Business experts have found that all entrepreneurs need at least 2 additional team members. Get your start up an experienced lawyer and a reliable accountant. You do not want to be scrambling for a lawyer when you need one. A good accountant will get your financial papers in order from the start, ensuring a less stressful tax season.
- The Hiring Process
Hiring employees and forming a cohesive team is a huge undertaking. Finding the "right fit" is hard enough. But equal to or possibly even more daunting can be the substantial financial investment.
The total cost of onboarding can be anywhere from 1 to 3 times the salary of the position. This includes taxes, benefits, training, bonuses, equipment, etc. Talk about high stakes at a time when resources are generally low.
- Providing Benefits to Employees
You have finally formed a well-balanced team. You want to protect this all-important commodity. Providing a healthy employee benefit package may seem counterproductive to your fledgling business. You may feel you simply cannot afford this luxury. But overcoming this hurdle early on and insuring your employees is what will keep them with you through the thinner times. Solid health insurance and making sure they are covered by workers' compensation is a must.
Being aware of the common challenges faced by start ups is a smart move. Knowing how to prepare for eventualities will mean that you are one step ahead and are prepared to handle all scenarios.