4 Common Problems that Startups Face
Any aspiring entrepreneur should know that starting a business is a difficult endeavor. While there have been many recent startups that have established a global presence, many more have disappeared into oblivion.
It is more important than ever for entrepreneurs to be aware of the issues that they will face when they launch their own business.
Here are 4 common problems that startups face:
Not Enough Funding
Cash is king. You need capital for your initial investment and consistent cash flow to maintain daily operations. Moreover, you will need cash if you want to expand your business and remain competitive. Lack of funding is a common issue that startups face and can quickly lead to business failure.
Unfortunately, securing funding is quite tricky for startups. Because traditional lenders view them as risky lending prospects, startups rarely qualify for traditional financing. As a result, entrepreneurs look to other sources of external funding, such as venture capital and alternative lenders.
The best way to tackle this issue is to make sure that you continually limit your business expenses. Consider using invoice factoring, a financing option that will help your business maintain a healthy cash flow by bridging the funding gap caused by invoices.
Poor Business Planning
When starting a business, it is important for startup owners to have a detailed business plan. While this may seem obvious, poor planning is one of the leading causes of startups failing within their first year.
Lack of planning can quickly lead to wasteful expenditures whereas a good business plan can help your company grow 30 percent faster. Instead of diving in and trying to figure things out on the go, take the time to develop a comprehensive business plan.
Additionally, make sure to conduct extensive market research. Another reason most startups fail is because there was a lack of demand for their products or services. Understanding your target audience and thoroughly researching your industry will be crucial to your success and longevity.
For your business to generate income, customers will need to know that your business exists and how it can provide them value. However, it is quite challenging for startups to determine the most cost-effective way to market their products or services while maximizing market reach. If you spend too little on marketing, you may not attract enough customers to generate steady profits. On the other hand, you do not want to spend an exorbitant amount on marketing only to achieve little to no customer conversions. Your marketing campaigns must be efficient and targeted via segmentation in order for you to achieve maximum ROI.
Digital technology offers numerous methods to advertise your business, from online videos, SEO, to SMS marketing. A good marketing strategy will let customers know why they should buy from you. Some startups struggle with marketing simply because they do not have anyone on the payroll who knows what they are doing. In such cases, it may be prudent to hire a marketing or SEO expert for assistance.
Competition will always be one of the biggest issues that startup founders have to contend with. No matter your industry, there will always be industry leaders that you will have to compete against. You will also face competition from countless startups looking to break into your chosen industry. If your business is an online startup, the competition will be even fiercer.
Accel Business Funding has provided invoice factoring and has funded many businesses for more than $380 million. When banks say NO, we say YES to funding in 24 hours!