How to Overcome the Most Common Start-Up Challenges

Growing a new business, in amongst the fun and excitement, presents a series of intense challenges. Here, we'll delve into the most common hurdles that start-ups typically encounter: from cash flow constraints that can cripple operations to the complexities of finding and hiring the right talent, and the crucial decision-making required for crafting a winning strategy. Overcoming these challenges effectively is the key to success for any budding business.

Cash

Top of the list for any start-up is cold, hard cash. Businesses come into this world without any revenue streams. Some might be able to start generating revenue quickly, but others (such as biotech firms) may need to dedicate years to R&D before there is any product that can be sold.

In either instance, it could be a long, long time before the company breaks even, and throughout this period the existential challenge for any start-up is managing cash flow to ensure it remains a going concern.

There are, effectively, two ways in which start-ups can solve the cash problem.  

Acquire funding. This is the only viable option for companies that will take years to generate revenue, but many other start-ups also look to external investment in order to jump-start their growth. VC or PE firms can boost a start-up’s warchest, but often at the expense not only of material ownership, but also of a degree of control over the business on the part of the founders.

Be a cockroach. Alternatively, companies can adopt a slower rate of growth, prioritising survival at all costs. This involves careful marshalling of what resources they have, in order to preserve start-up capital as long as possible. Ideally, cockroach start-ups will only spend money they have already earned. While this approach works for businesses that don’t want to resort to external funding, it is also the strategy adopted by many VC-funded companies.

Hiring

While the founding team can, to a certain extent, wear multiple hats and achieve a lot during a start-up’s early years, there will inevitably be knowledge and skills gaps within this team. Perfecting the product, implementing a marketing strategy, and scaling a sales function may all call for additional skills or headcount. 

With cash a limiting factor, though, making the wrong hire early on can have devastating consequences for your business. Furthermore, the time taken in sourcing candidates, reviewing CVs, and interviewing can be draining on the limited resources of a founding team.

With the stakes so high when considering early hires, a cost-effective solution is to partner with a recruitment expert in your field. The right partner can at once expand your total network, while refining your interviewing pipeline to only the best-suited, most engaged candidates for the position, saving you valuable time qualifying and interviewing the wrong candidates.

With a network of over 60,000 former-consultants, half from MBB firms, Movemeon are well-placed to partner with start-ups seeking strategy hires. Get in touch here!

Are you a candidate, looking for a new opportunity? Join Movemeon or log in here!

Product / Market fit

There are really two challenges here: identifying the problem, and building a viable solution.

Successful start-ups set out to address a real problem. Identifying this problem is, however, easier said than done. It is a common fallacy for start-up founding teams to focus on the solution; the product, after all, is the exciting part, but building a product that no-one wants is a surefire route to ruin.

Successful start-up founders are best advised to focus their early efforts intently on identifying the problem they are trying to solve. 

Once this is done, developing a MVP is the next key step; bringing this to market not only starts generating revenue, but if feedback is gathered from early adopters, it can inform future improvements of the product with the goal of achieving PMF.

Strategy

Strategy pervades all these challenges. Managing cash flow will depend primarily on the go-to-market strategy; hiring the right staff at the right time depends on the plan the start-up is trying to execute, while establishing PMF is intimately bound up in the company’s overall short- and long-term strategy.

Framing all of these challenges effectively requires thorough strategic thinking, including a keen attention to the product’s potential competition and market demand. There is also the arduous task of building a brand from scratch, without any prior awareness of the offering within the target audience.

Start-ups must overcome all these challenges and more if they are to be successful. Hiring an in-house strategy expert early on can help businesses plan for the future with the right tools and expertise.

Movemeon is expert at partnering with start-ups and scale-ups, connecting them to ex-consultants the world over that can provide vital strategic insight to overcome their hardest challenges. Find out more here!

About the author: Dan McEvoy is a freelance writer and editor, with extensive experience in finance, technology, HR, recruitment, and marketing content.