What are the 10 most important challenges for a start up?
Number 1: Health
This may be odd to put in the number one slot, but it is so very important. A start up is not a 9-5 job, as an entrepreneur you cannot switch off on the weekends and holidays. The pressure is constant, so your mental wellbeing becomes even more important.
A good diet, exercise and sleep are crucial to ensure that you are best placed to make the most of your opportunity.
Number 2: Planning
Or lack of it. The temptation to sprint after the dream of a unicorn can mean that you do not sit down and plan how you are going to get there.
This can mean that the company runs out of cash, cannot afford to market the idea properly and causes unnecessary stress (back to number 1…).
Creating a detailed business plan that covers product development, staffing, marketing, finance, and sales will ground you. Obviously, any plan needs to be fluid, but having a plan is vital.
Number 3: Knowing what you know
And more importantly, knowing what you do not know. None of us knows everything. You might be brilliant at product development, sales, or strategy but you will not be good at all of them.
This knowledge gap can lead to avoidable mistakes that cost the company time and money.
Identify your knowledge gaps. Listen to those around you, seek out expertise, find mentors and work with people that have the skills that complement yours.
Number 4: Financial Management
This is the single biggest reason a start-up or indeed any company fails. Whilst financial planning goes alongside the overall business plan, it is not just planning but more the overall fiscal management of the business.
Understanding when invoices are being paid versus when salaries and other business expenses are due, planning tax and VAT returns and keeping VAT monies separate. Knowing how to how to take monies out of a company in a fiscally responsible way, not creating debts through DLAs or other forms of mismanagement.
It is about creating a sound financial plan and sticking to it.
Number 5: Funding
To achieve the profitability and growth that you want and believe in, you will need capital. With it brings a new responsibility to the entrepreneur and the business.
Raising money is difficult, it requires you to get people to buy into the idea, the plan, and most importantly you.
There is also a myriad of ways to raise money Angel Investors, Syndicates, VCs, Accelerator’s, Crowdfunding.
You need to select the one that works best and will provide you with the funding you need. You also need to consider how you raise money and if any of the government incentives can help. Both SEIS and EIS offer compelling incentives to investors.
When to raise money is significant. Raise too soon and you risk overly excessive equity dilution. Too late… and you risk the business.
Raising money also takes time, again this is all about planning. Knowing how much money to raise, when to raise it and what to use it for.
Number 6: Demand
Demand for your product or service will determine if it succeeds or fails.
It is critical that you research your audience and ensure that they are prepared and willing to buy. Identifying the target audience, the monetary value that they attach to your proposition and the frequency of purchase are all essential in the financial planning of the company.
Number 7: Marketing
This comes on the heels of demand.
It is quite easy to get caught up in the latest marketing trend, believing you will easily, and cost effectively reach your audience.
Far too often this disregards the basic principles of marketing, resulting in unnecessary cash burn and limited sales conversion.
To work marketing needs to be effective, audiences understood and channels to reach them appropriate.
Again, this comes down to planning, knowing what to say, how to say it and to whom to say it to.
A well-constructed marketing plan with definitive KPIs will complement your sales pipeline and enable you to get the results and growth you desire.
Number 8: Leadership
As your start up grows you will inevitably expand. This is a critical time for any entrepreneur, it is the difference between a simple idea and a multifaceted company, which brings a whole plethora of new and exciting challenges.
You are no longer cooking for one, rather you are running an extraordinarily successful kitchen that feeds a diverse, demanding, and growing family.
You need to be clear about the vision and mechanism to achieve success. The family (your employees) need to believe in you, buy into the vision and know they can individually contribute to its success.
Number 9: Hiring the right people
David Ogilvy, the founder of the advertising agency that bears his name, once said
‘If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.’
This should be the mantra for every entrepreneur and as such requires no more explanation.
Number 10: Time management and productivity
This takes us full circle, back to planning, to your personal time and the effectiveness of you as an individual.
Poor management and your health and the company will suffer.
Focusing on what you do, how you do it and when will result in a greater chance of success and the knowledge that whatever the result you gave it your best shot.