Starting and running a startup is all about solving problems, albeit with minimal resources. Yes, you can only keep your startup afloat if you can withstand the challenges that bigger businesses can breeze through. Now, what are some of the problems that you should know as a new startup business owner? To answer this, we have taken a look at some common challenges that you should be aware of as a small business owner.
Common challenges startup businesses face
Management of the cash flow
If you are new to the world of finance, then the cash flow is essentially the difference in the amount of cash in the opening balance and closing balance. In other words, you are looking at the money going out in comparison to the cash coming in. The challenge is to avoid a negative cash flow as a small business owner. Startup owners tend to grapple with the problem of ensuring that they effectively manage the cash flow to run their venture smoothly.
So, as a startup business owner, you ought to ensure that you manage your cash flow if you are to grow. This is only possible if you keep track of where the money comes from and where it goes.
Tip: Keep your personal finances separate to the business so that you don’t get mixed up in assessing the health of your venture
Tax problems rank top among the most significant challenges most companies face, including the big ones! For small business owners, handling things like preparing tax reports and filing returns can be a challenge. This is especially the case if you don’t have the skillset. No wonder, quite often, startup owners find themselves paying fines for late tax return filing, or even paying taxes they otherwise shouldn’t have paid.
Well, several ways can help significantly reduce the stress, disorganization, and also the time required to prepare the taxes. For example, you can work with tax attorneys who handle planning issues to help you organize how you can manage your taxes. You can also use accounting software that can track the expenses and generate detailed reports, calculate taxes, and even auto-import bank transactions.
Finding the right talent to hire and retaining them in your startup is another tough challenge. For starters, most top talents will opt to work for an employer who offers them great financial benefits. These are some of the situations where small Startups might not be able to compete with larger businesses. Consequently, most startups end up experiencing high employee turnover and, therefore, the high cost of management.
Startup owners have to be creative in handling recruitment and employee management issues. For example, you can try to sell your culture in a bid to attract talent to your business. You can also recruit employees on short term deals or even outsource services to save costs.
Running any business requires money. All the business processes ranging from hiring the right talents to marketing your products require that you inject enough capital into the business initiative. The challenge is to get funding when most investors are now spending their money on already established ventures. Of course, investors do not want to risk their money, given most startups tend to die.
If you are in such a situation, you can try to bootstrap your business before rushing for funding. For example, it would help if you are in a business niche you love. You can also use a remote workplace setup instead of renting an office space. Moreover, you can work with team members who would like equity rather than cash for their input, among other methods. Once the business is up and running, you can pitch to investors with a proven business model.
Lack of innovation
With the increased number of startups and frankly, other businesses struggle to owe to a lack of innovation. You can’t rely on the product or service that got you to business. You will need to keep creating new and creative products and services to keep growing.
Building a startup is one thing, but managing the venture is another challenge altogether. If you are new to the business, then expect to be confronted with problems you have to keep solving. Build your skills and find the people with the skills to help you solve the problems. Remember, if you can identify the issues and determine the best ways to deal with them, then you can rest assured that your business will only get better.