Challenges faced by startups are a major concern for first generation entrepreneurs.The very word "Startup" evokes visions of the rugged individual who started from scratch and stay afloat in an overcrowded marketplace. SMEs/Startups can become successful ventures only if they are managed properly.
There are few key challenges faced by startups that can prove problematic. A successful business needs to be capable of adopting quickly to changing circumstances. It also needs a solid management team and ability to invest in growth.
The first challenge is financial. When the operations is only just starting, the resources it requires can be daunting. Access to finance can be a challenge because most new businesses do not generate profits immediately. However, Investors expect the startup to generate revenue that will pay at least for operational costs if not profits in the initial years. Capital may not always be readily available. To secure enough funding to continue operations, startups generally look for debt financing, Angle investors or venture capitalists. To attract venture capitalists and angle investors, the startup's business plan and financial projections must be lucrative. To get debt funding, start up must have necessary immovable property or any other collateral security owned by startup or promotors.
The government of India in order to support the rehabilitation and ensure the upliftment has implemented following financial stimulus for SMEs and Startups.
1. Collateral Free bank loans to business registered as MSME.
2. Exemption of interest rates on overdrafts up to 1% .
3. Eligibility for Industrial Promotion subsidy.
4. Protection against delayed payments by Ministry of Micro, Small and Medium Enterprises, Government of India.
5. Concession on electricity bills. etc.
The second challenge faced by startups is marketing. Successful marketing is the key to making the company's product or service popular with customers.
The third challenge is staffing. Although technology has provided new ways of recruiting employees, finding the right people with the right skills can be difficult. startups lack the experience it needs to staff its positions with right people.
The fourth challenge is sustainability and expansion. once the product gets created, required production volumes can be produced only if proper manufacturing facilities are available.
To run the new business successfully, the first thing you need to have is the knowledge and skills to run a business. So, how do you go about getting these ?
Having an MBA or any other management degree is an advantage.
Have clear strategic goals and business plan . Without these goals and objectives you wont know what direction you should take your business or what methods you should use to achieve them.
Have a well-chosen key performance indicator(KPI) that can measure your business in different aspects and clearly quantifiable. few such KPIs are
Output KPIs
Measures the output, accomplishment targets, customer revenue, client retention rate, and profit margin.
Leading KPIs
Include several new strategies, guidelines, and innovations.
Qualitative KPIs
Include Customer satisfaction, staff satisfaction, process quality measurements.
Process KPIs
Focus on customer queries, tickets raised, tickets resolved, and support resolution time.
Input KPIs
Measures input of staff, time, money, and equipment.
Quantitative KPIs
Focus on accidents, complaints, and recurrence rate.
Actionable KPIs
Focus on commitments, process effectiveness rate, and work culture.
Business Impact Metrics
Business impact metrics, along with other KPIs display the impact of marketing strategies and sales on your business. Includes awareness campaigns, repetitional and customer acquisition, sales target, and stock price.
Setup a strong Enterprise Resource Planing(ERP) systems in place to provide the required information at right time to right people to take right decisions to ensure the needed resources are allocated to make a startup successful venture.Many companies are adopting Information Technology Infrastructure Library (ITIL). ITIL optimizes Information Technology service management(ITSM) operations, which is influential to fulfil the demands of your business. IT support structure works on five processes such as
Event management
Incident management
Request management
Access management
Problem management
Operational risk management(ORM) practice is a significant approach to reduce operational loss. Assessment of errors at the entry-level reduces the possibility of major incidents. Let’s have an understanding of a few types of risks that lead to an operational loss.
Performance analysis, Refinement of strategies, and guidelines adherence are helpful measures to withstand business challenges faced by SMEs and startups.
BY
TEAM HNK
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