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5 most common startup problems and how to resolve them

Every company goes through ups and downs, so it’s important to recognise the commonalities. Startups have unique challenges that arise from being young businesses with novel ideas, limited resources, and a small team. Here we rounded up some common startup problems that startups face while they are growing, and suggest solutions that have helped other teams overcome these challenges.

  1. Insufficient capital

Capital is needed to make sure that the company can continue running and the lights stay on. The majority of startups are loss-making and rely on fundraising to stay afloat. Bringing fresh capital into a business is uncertain as to how much and when it would come in. Unfortunately, we have witnessed numerous startups succumb to bankruptcy and insolvency due to poor financial management. Startups should be preserving their cash flow and observing their burn rate.

To plan for predicting cash flow, startups should also factor in when inbound and outbound invoices are due. To reduce the company’s expenditure, the company should be looking at keeping costs to as minimal as possible. Earlier stage startups benefit from preferential pricing discounts with certain service providers including Intercom, AWS, and Segment. If startups require specialist knowledge or training in certain areas, startups could leverage their network to look for advisors rather than hiring a consultant. Startups can also use online resources like EU-Startups which are free or low cost valuable resources where startup teams can learn more about operating a startup.

  1. Not having the right team in place

Among the limited resources a startup has, the team in a startup is one of its key components that will drive the success of the business. The early employees of a startup defines the success of the business. Not hiring the right people for the organisation can be counterproductive and also damaging for the company including eroding company culture and the employee morale.

Having the right team in place is essential for the business to grow. Before going out to hire, startups should devise a recruitment strategy and understand their business needs and culture. Startups move fast to be able to stay competitive and scale but they must take an approach to hiring where they do not rush. You can check out more on how to hire talent for a startup on a tight budget and also traits to look for when building your team.

  1. Disorganisation when growing too fast

Startups should grow fast, however some issues arise when they grow too fast. When startups grow too fast, they rapidly expand their teams to support their growth. As the team grows, they suffer from growing pains such as lack of alignment and miscommunication across different departments, modifying processes, and also maintaining culture.

As startups grow, they should implement processes, plans, and documentation to facilitate business continuity. It is also important that startups maintain a communication strategy that fosters open communication, transparency, and alignment across the company. Having regular cadence meetings like town halls, all hands, and weekly sync-ups across organisations are helpful in maintaining a regular flow of conversation within companies.

  1. Lacking adequate management and structure

Startups operate with minimal management and oversight than a larger company would have, and often plans change spontaneously. Some startups skip planning altogether as they expect their business plans to be subject to change. Having inadequate management and structure can lead to missed business and growth opportunities and employee disengagement.

Business plans and setting strategy is imperative to get startup teams working towards a common goal. It sets a tone of structure, organisation, and consistency. Objectives help employees become empowered to make key decisions and carry out their work. Although startups often think within a short time horizon, they should still create business plans and objectives and adjust accordingly. Startups are easily distracted and can lose focus on their mission or product, so having these wider objectives in place can help teams to stay focused and navigate towards a common objective.

  1. Not being focused or managing time well

Startups will be faced with more problems in a day than they have time or resources to tackle. Some startups try to solve all of the problems that are thrown at them. Although this sounds productive, they may spread themselves too thin and provide weaker solutions. As a consequence, they sacrifice time that could be spent focusing on more meaningful work.

Startups teams should be experts at prioritising their work. Instead of trying to tackle everything, they should focus on the most impactful work first. Being focused and organised can also help startups with time management.

Amanda Pun
Amanda Pun
Amanda is passionate about startups, particularly in the FinTech and B2C spaces. She was one of the first employees of fintech startup, Homeppl, and has expertise in Product Management and Operations. She is based in London and originally from Canada.

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