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What Major Obstacles Do Startup Founders Face Most?

July 8, 2016 by Dr. Jon Warner in Entrepreneurship

What Major Obstacles Do Startup Founders Face Most?

Startups come in all shapes and sizes and so do the founders that start these new companies. In addition, the path that each company takes can be very different depending upon factors such as cash to operate, early customer adopters, people dynamics and even plain luck, just to name a few. However, despite the differences it turns out that there are many common challenges for startups and their founders and in this brief article we therefore want to explore five of these. 

1. Founders need to make their startup a full-time job.

Although it’s not uncommon for a founder (or indeed two or three people to be thinking about a startup and even working on it a little while working in a full time role elsewhere, once there is any publicity for the new business and more than a few months of pre-work, someone has to be full-time in working on it. This means that an individual has to quit their day job, or at least commit at least 40-50 hours a week to their new venture if he or she wants it to be successful. This is often a frightening leap for many people and certainly means that the person will lose the “safety net” of a regular salary.  However, the “severing of the ties” has a huge impact in terms of mental commitment to the cause. 

2. Get the right people on the bus (and lose them quickly when they’re not)

At the very earliest stages in a start up, little “screening” may take place in terms of who works with a founder. People in early entrepreneurial ventures are often friends, relatives and just individuals who support “the cause” and are prepared to help for little or in some cases no money. However, these are not necessarily the “right” people to have on the startup “bus” and over time some individuals may become the wrong people. What this means in practical terms is that a startup founder needs to take recruitment pretty seriously as soon as possible and start to make sure that every single person is competent to do the job(s) he or she is needing. The general failure rate in startups is high and much of this is due to people skills not being what they need to be or results from internal conflicts between early founders/employees. A primary founder does not therefore want to take too long to fire people who aren’t doing their jobs and who can do real damage to the team and the company. It should not be forgotten, next to having enough cash in the bank to get to the next major milestone, capable and happy people are the best asset a founder has. 

3. Technology “smarts” is not the benefit you might think it is

Even when a startup is apparently a “technology” heavy one, being too focused on the technology or the “smarts” that the startup is bringing to market is not necessarily the benefit the founder may think that it is. All startups main focus should always be to bring something to market that people are willing to pay money for – this may be no/low or high technology but must be compelling or solve a real problem first. This then needs to be communicated to the people that care the most and then be brought to the market in intelligent ways so that good feedback improves the offering and makes it even more compelling over time. Technology can help with all of these activities but it is not an end in itself. In other words, if too many people are endlessly “writing code” or tinkering with technology, you may find yourself “over-gilding the Lilly” and out of cash sooner than you think. 

4. Competition is not a primary concern at the outset

Many founders tend to worry a lot about whether they idea is unique or what other people may be doing that might be similar or even the same. This often entails too much time being taken worrying about competition or keeping overly quiet about the startup business for fear that others may copy their product or service. It turns out that most of this worry is for nothing for two main reasons. Firstly, as long as a startup company is genuinely solving a problem for a large enough group of people, there is more often than not room for more than one company doing this (so competition tends to validate the need). Secondly, the competition (where it really exists) is usually so busy with its own products and services that the amount of real time it is spending on thinking about what a startup competitor might be doing is less than a tenth of the time you may think it is. 

5. Get to MVP, deliver quickly, and iterate

Research suggests that most startup companies take far too long to ship their product or deliver their service, even if it is only to a few end users or customers. In other words they take a long time to put a minimally viable product/service out in front of actual (and ideally, paying) users (and then getting the feedback from them). This mainly happens because founders are often “over-engineering” their offering and consuming cash and people resources in trying to achieve a level of quality that they are “guessing” that the customer is likely to need. But this is the opposite approach to one that is likely to work much more effectively. New products and services to market improve substantially when early customers (usually called the “pioneers”) use them and tell you what you got right and got wrong. As LinkedIn founder Reid Hoffman said: “If you are not embarrassed by the first version of your product, you’ve launched too late.” Simply put develop your MVP quickly, get it out there and have great mechanisms to learn from the feedback you get.

These five issues are not the only ones that startup companies struggle with, but if you focus on these alone, the chances of surviving and thriving will be substantially better.

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About Dr. Jon Warner

Dr. Jon Warner is a prolific author, management consultant and executive coach with over 25 years experience. He has an MBA and a PhD in Organizational Psychology. Jon can be reached at OptimalJon@gmail.com

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About the Editor and Primary Author

Jon Warner

Jon Warner is an executive coach and management consultant and in the past has been a CEO in three very different companies. Read more

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