Creating a startup is far from a sure thing. You are going to face plenty of challenges along the way. This is especially common for businesses that are at an early development stage. Let’s look at a rundown of the typical risk faced by a startup business. More importantly, we’ll share some tips to overcome these stumbling blocks.
Series A
This is the start of your fundraising journey. At this stage, you should have a plan. But you lack the money to take the business to the next level. Series A fundraising lets you take on investors. While you might be early in the process, there are still some significant problems that you might face.
Managing Money
At the beginning of your startup journey, you only have limited resources. Investors can provide a small cash injection. But, to survive, you need to be hyper-focused on budgeting. Only spend money on necessary costs. In the beginning, this often means having a fairly small team of employees.
Hiring The Right People
This is a challenge that you’ll face, no matter what stage your startup is in. When you are in the pre-seed or series A phases you’ll only have a handful of employees. You must choose your team wisely. Focus on identifying which skills you need. As your business matures, the number of employees you have will rise. This creates its own set of problems. HR teams could be required, to maintain a cohesive work environment.
Strategic hiring plans can help you avoid most of these problems. You should know what roles you want to fill. Identify the skills your ideal employees will bring to the table. Don’t forget to take their personality into account, making sure that they are a good fit for your company.
One way to solve this issue is by using freelancers. Series A startups can benefit from this approach. It’s a cheap way to get specialized skills. More established companies, though, might be better off providing full-time employment.
Series B
Before we look at the problems you might face, we need to know what is a series B startup. Typically, during this phase, you’ve started to get a little traction. However, the company is still relatively small. The money generated during a series B raise is used to scale and grow the business.
Time Management
During the early stages of your business, you could do everything yourself. But when you become a series B startup, you’ll be running a substantial company. You’ll need to learn to trust your team and delegate tasks effectively. If not, you’ll risk burning out.
Scaling The Business
Seeing early success is a good sign. However, scaling the company up can cause big problems. You will need to find a way to ramp up production. Managing the burgeoning business will require more employees. Getting this process right will require a lot of money.
The best way to overcome these issues is by thinking strategically. Break the process into more manageable steps. It’s also important to watch your cash carefully, making sure that you can afford your expansion.
Series C
By the time you apply for series C funding, your company should already be quite successful. At this stage, you’re going to use the money to expand. This could involve opening new markets or growing your product range.
Keeping Investors Happy
While investors might help solve your financial troubles, they create new problems. It doesn’t matter whether you’re a series A, B, C startup, you need to know how to keep investors happy. If you can’t, they will leverage their ownership stake to try and influence the decision-making process. As you can imagine, these disputes can quickly escalate and become a major headache.
The key to keeping your investors onside is to focus on communication. Make sure to continually update them about how your company is performing. If you run into any problems, investors expect you to be upfront.
Staying Ahead Of The Competition
As your company grows, other people will want to try to emulate your success. You can expect plenty of rival businesses to pop up and try to steal your piece of the pie. While there is no way to eliminate the competition, you can keep them at bay.
It’s important to continually assess the market. Ideally, you’ll offer something unique that will set your company apart. Listen to what your customers are saying. This will allow you to take advantage of emerging industry trends. Finally, don’t be afraid to enforce your intellectual property rights, suing competitors who try to steal your ideas.
Conclusion
Running a startup won’t be smooth sailing. But, with a little preparation, you can get over any obstacle. Remaining committed to your business plan will pay off. Eventually, you will have turned your tiny startup into a thriving company.
