Ashley Wheeler CEO of HdE GROUP: as a mentor to budding entrepreneurs as part of the Bristol University Enterprise Scaleup Program, I tend to see many of the same obstacles appearing in every new startup, so we thought we’d share some of these challenges if you’re thinking of developing your own ideas.
Starting any business has key dependencies on at least five major elements, including product design and delivery, the right people on the team, funding, a sizable market opportunity, and a well thought out marketing plan. However, nobody ever really plans for failure, but here are some things to consider:
1. You hit snags in the road.
Despite your best planning efforts, innovative solutions always take longer than expected, and functional or quality problems will appear at almost every stage, especially if you are developing a new product or platform.
The message is to anticipate the unknown (easier said than done, I know!), however, take the time to develop provisional plan schedules and scenario test when you can, but above all, communicate frequently to key members, make this part of your culture from day one – an open office is a collaborative workforce.
2. Key team member pulls out or can’t deliver.
Even the strongest relationships are often tested and broken by the stresses of a new startup. I’ve seen it before, investors declining to fund startups made up of family members or fighting co-founders.
When that awkward people problem arises, it’s critical that you make changes as required quickly – again easier said than done, I’m not advocating sacking anyone, they could have better attributes somewhere else in the business, but figure that out fast.
3. Funding runs out before customer sales kick in.
One of the pitfalls of optimism is the expectation for early customer growth, and underestimating the real costs of delivery. Some startups I see actually “fail by success,” with too many orders landing before payment is received.
The solution here is to never stop the fundraising cycle, moving quickly from friends and family, to angels, to VC’s – and that involves a robust 3-5 year business plan, from day one. Don’t underestimate your own value as customers arrive, keep control by managing receivables and payables personally.
4. The competition moves in.
Competitors see the value of your idea, and the good ones move fast. Opportunities come and go as key markets shift over time. Every startup should assume the need to pivot at least once, without detracting from your original business plan, try to develop complementary offerings that can provide additional revenue opportunities and future provisions.
And don’t be ashamed! Startups who had to pivot for success, include Twitter moving from podcasts to a social media platform we know it as today.
Smarter entrepreneurs don’t react to change, they define their key milestones and metrics for tracking progress, and are alert to the future. Keep your business plan updated and structure your business to be agile.
5. Marketing and sales take more time and effort than you thought (trust me they do!).
Every entrepreneur quotes the famous line “if we build it, they will come.” Unfortunately, it doesn’t work like that. Word-of-mouth will only get you so far. You need your best people and dedicated resources for your early marketing and branding, if you don’t have those capabilities in house, look for partners or specialist agencies to put you on the path to success.
And finally, not all entrepreneurs will face all these challenges, but it’s important to understand them – the successful founders we work with are those that are prepared and closely connected to their business and markets, every step of the way.
For more free support about your startup idea, speak to the HdE AGENCY team today.