A start-up business is an entrepreneurial venture that endeavors to validate a marketplace need by developing a viable value proposition around a founder’s innovative product (service, process or platform). There are many difficulties and impediments associated with starting a new business and others that come with maturing it to profitability. Recent market intelligence on start-up failure reports that many start-ups commence with boundless potential, but about 90% fail to make it past the three-year mark because the founders don’t have the tenacity or knowledge of how to overcome the challenges they find themselves faced with on a day-to-day basis.
Founders face an array of challenges, that they must overcome, before they can enter the market with a saleable product. Typically, a startup will begin by building a first minimum viable product (MVP), a prototype, to validate, assess and develop the new ideas or business concepts. In addition, start-ups founders do need to conduct intense research to deepen their understanding of their ideas, technologies or business concepts and the commercial potential in targeted markets.
There are literally hundreds of make or break decisions that must be made and actions to be taken in business startups. Everything, including choosing a name, handling all the paperwork, setting up a location, getting supplies and staffing take time and effort-probably more time than what you may think. And everything costs money. So be prepared to work hard, make decisions, and spend money.
In summary, starting and successfully maturing a start-up to success requires founders to possess the appropriate passion, entrepreneurial spirit, willpower and persistence, free time, money, and the honesty of knowing what that do not know.
The most commonplace start-up problems facing founders are as follow:
Investment / Funding
There is always a period between the decision to start a new business and when revenues are first generated. During that time, founders must have the necessary investment to fund the startup experiences and cover normal living expenses, if required. It can be tempting to just continue to charge more on personal credit cards, but ultimately those balances must be paid, and the interest costs become a significant drag. On an ongoing basis, founders must balance the desire to pay the operating cash needs of the business and the accumulation of funds to grow and expand the business.
In the early stages of a startup it is mission-critical to develop a prototype of the product to validate the founder’s original idea and design. The prototype, an early sample of the product, generally used to evaluate a new design to enhance precision by engineers, marketing professionals and potential users. Prototyping serves to provide specifications for a real, working system rather than a theoretical one.
Prototypes explore different aspects of an intended design:
Proof-of-Principle Prototype: serves to verify some key functional aspects of the intended design, but usually does not have all the functionality of the final product.
Working Prototype: represents all or nearly all the functionality of the final product.
Visual Prototype: represents the size and appearance, but not the functionality, of the intended design.
Form Study Prototype is a preliminary type of visual prototype in which the geometric features of a design are emphasized, with less concern for color, texture, or other aspects of the final appearance.
User Experience Prototype: represents enough of the appearance and function of the product that it can be used for user research.
Functional Prototype: captures both function and appearance of the intended design, though it may be created with different techniques and even different scale from final design.
Paper Prototype: is a printed or hand-drawn representation of the user interface of a software product. Such prototypes are commonly used for early testing of a software design and can be part of a software walkthrough to confirm design decisions before more costly levels of design effort are expended.
Marketing & Sales
Most founders have a passion about their product or service and this is good! However, do not let that passion blind you to the reality that others may not share your passion. Founders must have a detailed marketing plan that identifies target markets and potential customers, makes the benefits of the product visible to those prospects, and motivates them to make a purchasing decision. Creating a formal marketing and sales plan early and then constantly adapting it to market intelligence is critical.
Professional Advise and Counseling
The personal self-confidence it takes to start a business may also hinder if potential risk and exposure are not managed in a professional manner. One of the most enlightening aspects of being in business is realizing that you do not have all the answers! Professionals, such as management consultants, attorneys and accountants, can help deal with some of the business and technical components of the new company, but others, such as customers, employees, other business people and even competitors, can also provide insights into the operational activities of the business and marketplace.
Truly listening to the potential customer requirements will identify what they want from the product (s) and how they want to interact with the business can provide significant clues for developing the most effective and efficient and risk-adverse processes.
Employees will often know more about certain aspects of the business than the founder(s), and their observations and input can be valuable. Business people you know, especially other small business owners, may have already faced many of the issues you are facing and would be happy to offer ideas. Even your competitors may be a source of valuable advice. It is surprising how often a casual conversation can lead to useful ideas and maybe even ways to work together on certain types of business.