The terms ‘entrepreneur’ and ‘start-up’ conjure up misleading imagery of elite success. Life as an entrepreneur leaves bumps and bruises and when you’re launching your start-up, it can take you on a rollercoaster ride. Allow me to enlighten you on some of the challenges you are likely to experience with start-ups.
Standing in the doorway of the entrepreneurial world rarely cultivates unhindered, unshakeable confidence. It is more like being on the starting blocks of a steeplechase race without knowing what is on the far side of each obstacle.
For the serial start-up founder it is a familiar journey but the same hurdles still apply. For the newly minted entrepreneur, it can feel like the steeplechase is to be done in darkness. Either way, there are helpful nuggets of wisdom to learn ahead of your launch so let’s shine a little light on those.
First Time Entrepreneurship has a Steep Learning Curve
First thing to note is that expertise in one field is not expertise in them all. Without being mysterious, you might be an expert in the area you are launching into but that doesn’t mean you don’t need to learn.
Where you lag behind serial entrepreneurs are often the most important pieces. Unfortunately, new entrepreneurs arrive on scene with an experience deficit. The factors that lie within that experience gap include knowing the unequivocal importance of conducting market research and evaluating your idea to meet a market need.
Beyond those, the administrative aspects of constructing a company vision, business plan and addressing weaknesses or red tape matters can pose major issues down the line.
Serial entrepreneurs create established networks of mentors, contacts and know where they need to focus. They typically appreciate the need to have a co-founder to bounce ideas off and collaborate in important decisions. Most of all, when you have done it before, you know how to engage your customer base. Addressing the customer through channels they use is integral to success.
First time entrepreneurs ought to learn these pieces fast. They are almost always difference between successful launches and the rest.
The Fountain of Start-Up Financing Remains Fickle
Every year there are about 50 million start-ups the world over which is in stark contrast to earlier decades. The reason being? It is more accessible to start out now. There are more solopreneurs, freelancers and side gigs. However, the well of financing a scalable operation is increasingly obtuse.
Seed capital and start-up funding is diminishing in favour of conservative investing.
A drop-off of 40-50% in seed investment occurred between 2014 and 2020. With the impact of coronavirus, this is likely to dwindle further. Investors and banks are now waiting to see growth, progress reports and guarantees for their money making financing a start-up launch all the more challenging.
The average start-ups are now going to market with less than $50,000. Fortunately, people have done more with less so no need to temper your big dreams. There are also far more financing avenues out there now.
All this means is that any entrepreneur bootstrapping their business had better stay in tune with their finances. Decide early what capital expenditures need to be made and what could simply be rented. Understand your money! How far and how long can it realistically last? When do you need to have your first sales by?
New or returning entrepreneurs face the same money struggles. Everyone is interested when you are winning but it can be a tough slog to getting there.
If you do get an investor early, make sure they are going to be around for the long term. None of this buying early, cheap ownership stake before bailing on responsibilities of mentorship.
All the Entrepreneurial Hats Can’t Fit on just One Head
A start-up is often portrayed as the fight to get a business of the ground. Rarely accounted for are the interpersonal skills required to build a team behind the vision.
Being an entrepreneur makes one ambitious but not automatically a leader. Having a vision to unite behind is a major cornerstone of any leadership but it is most ably assisted by actions and hiring processes.
Building a united, successful work place culture is primarily affected by the first few employees. A strong argument could be made that hiring for a culture fit is more important than hiring for a skill set. Hiring for the culture you want sets the tone. A team member who is notoriously prickly can tank your culture and potential.
As the leader of a start-up, you will hounded with every question as things get going. Look for people who take ownership and problem solve on your behalf. Leaders create leaders, not just followers.
With the right people in place, anything is possible. It is up to you, the entrepreneur, to demonstrate the values held and behaviours tolerated. Coming down hard on mistakes begets hiding of future errors. Similarly, welcoming challenges and new ideas opens the door to new opportunity and innovation.
Creating psychological safety is the trick to unlocking team performance. Employees who feel respected and valued by leadership and within their team contribute more. They go the extra mile to overcome problems and personalize your endeavour as their own.
Not Everyone Wants You to Succeed
Entrepreneurial launches are stressful and challenging enough without knowing people may conspire against you.
Every thriller has a villain. Fortunately, entrepreneurship is not written by M. Knight Shyamalan and you learn your nemesis, if they exist, quickly… preferably before they move.
Competitors are simply companies striving for similar goals to you. As the new entrant to the market, you are likely prone to their reactions. It doesn’t necessarily make you prey. Studying your market and previous reactions to new competitors is integral. If you can predict the outcome, you can plan accordingly.
For example, if you know your opposition tenaciously competes over pricing, it can benefit you to offer more features to your product. Make a differentiation as soon as you can so the market can tell what you do differently. It helps to note that not every competitor will be out to get you so don’t drain too much energy into these concerns.
Be Objective with Friends and Family Advice
An unfortunate counter to your business can also come from your personal networks, friends and family. Unless you’re a member of the Adams family, your loved ones are generally vying for your success. However, incongruences easily occur.
Your nearest and dearest offer all the support they can muster including advice. Most business owners tend to heed the guidance because it comes from a well-meaning, trusted source. Unfortunately, they are not usually experts in your business.
This can become increasingly complex when they are principle investors as is often the case. As mentioned, selecting mentors and co-founders is an essential part of business.
Take care in choosing your sources of advice and protect your relationships by objectively weighing the validity of each opinion offered. You are ultimately responsible for your launch and listening to sources less informed in the industry, regardless of meaning, can have adverse effects.
Being an entrepreneur takes a toll no matter how familiar you are to it. Getting a new adventure started takes tireless effort, sacrifice and is often quite lonely.
Entrepreneurs have a challenging habit of being unable to switch off. The thoughts of going home and not doing an extra hour or always feeling like you could do more leaves most in limbo.
Alternatively, the buyer’s remorse also perplexes. For first timers, you might have left a steady job to pursue a dream. A precarious start might leave you wanting to keep a foot in the door, just in case.
Adding loved ones and relationships to the mix often add further pressures as the strain of maintaining progress on all fronts accumulates.
With these competing forces, start-up owners routinely question every move. Doubts can build up, challenging your confidence and esteem. Without mindfulness, it is hard to keep an even keel.
Exercising, eating healthily and even practicing meditation serve the purpose of balancing your ambition and your mindset. Being protective over your mental health as you are over your business and family yields sustainable enterprise benefits.
Launching a start-up of any kind is like playing the protagonist of a thriller but not knowing the ending. Shocking plot twists come your way causing reactions, twists and turns. Fortunately for entrepreneurs, the path is well beaten. While it may be new to you and everyone’s story is different, you have the opportunity to learn from the mistakes and tales of others.
Any start-up challenge is first solved by acknowledging there is one and that should occur ahead of time. Knowing the challenges on the horizon gives you the most control over how the story unfurls.