Knowing how to manage a startup company is undoubtedly crucial. Setting up a business entails lots of risks, which when not properly managed could result in damaging consequences such as bankruptcy or failure. Problems in business are common. Hence, business startups must consider them carefully for the business to thrive in a really challenging world.
Common business problems and how to avoid them
Financial MismanagementIt is understandable in any business endeavor that finances are very important when it comes to starting a business. The lack of it will just lead to problems such as being in too much debt or bankruptcy. According to a study, about 79 % of failures of small businesses have something to do with starting out with little money or lack of financial support.Aside from lack of budget, financial mismanagement could also arise from improper handling of the profits and too much spending on unnecessary things. Financial mismanagement could deplete the assets of the business and will just put the venture into so much trouble such as excessive debts or closure.
How do you avoid it?To avoid financial mismanagement, it is important that the business is well planned when it comes to financial investments. The business owner must allocate a buffer fund that will cover first few months or of the lean season. This approach is needed to prevent the funds from being exhausted and prevent the company from over-borrowing. Additionally, the company needs to have a proper cash flow management to monitor where the money goes and how much money comes in.
Poor Management/LeadershipOne of the most important aspects of any organization is leadership. Poor leadership within the business will keep the venture off track. Any business needs a leader or manager who could handle all the processes within his/her jurisdiction. Managers give direction to the entire organization and enable the execution of the company’s mission and visions. According to Forbes, some of the most common leadership problems that lead to failure of new businesses include lack of character, lack of vision, lack of execution, and many others.
How do you avoid it?This problem in poor management could be avoided by putting up a responsible and capable person to do the job. Also, the managers must undergo proper skills training and development to be able to equip them with proper knowledge and empowered decisions vital for business growth.
Poor Marketing StrategyAn effective marketing strategy is very important for a successful business and having a poor approach on marketing could pull the business venture down. Poor marketing strategy could stem from lack of well-researched plans, poor business study and undefined target market. Without these elements, the company will be having a hard time selling their products and looking for solid customers.
How do you avoid it?
- Allocate significant budget for effective marketing
- Hire professional and effective marketing officer who delivers output
- Be unique and creative in marketing approach
- Study and research well about the customer segments
- Use the available effective tools such as social media and other platforms, combined with the conventional approach
- Be innovative in marketing strategy
- Fully understand the market
Failure to Establish a Stronger Team/WorkforceA strong team or workforce is very important to an organization. A business who could not keep or retain talents signals that something is not right when it comes to human resource management. While the company needs to spend for skills training and development, it must also exert extra effort to keep employees from leaving.
How do you avoid it?
- Giving employees the proper salary and benefits
- Creating an environment conducive to a happy and productive labor force
- Treat employees as family
- Ensure their safety and security within the workplace
- Equip them with proper training and skills development
Lack of InnovationAnother one of the common issues startup businesses encounter is the lack of innovation. In the middle of a diverse and challenging market, businesses must come up with something that will outshine competitors and attract more customers. It needs to have an eye for what the latest trends and needs of the clients. A company whose products lacks innovation will eventually bore the customers.
How do you avoid it?This common problem in startup business could be avoided through keeping up with the latest technological innovation and being abreast with market trends. Also, the company has to think several notches higher than competitors to come up with products and services that are responsive to client’s’ demands and needs.
ConclusionMost businesses, especially during the initial phase of their operation, encounter different sets of challenges that will either make or break their venture. But with your knowledge of how to manage a startup company, along with correct strategies, the common issues startup businesses encounter will be solved immediately and allow business to prosper.
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