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Challenges faced by Startups

Navigating the Complex Challenges of Startups and Paving the Way for Sustainable Success

Challenges faced by Startups

Starting a business can be thrilling but the process to success is a devil of a job, it requires competitive business plan, skills, growth strategies, proper finance management and what not. Studies show that, 9 out of 10 startups fail mainly because of no proper research before taking a head start.

 

Nonetheless, there are numerous prominent examples of startups that started really small and grew into world leading brands. Apple, Amazon, Pepsi, Starbucks have lifting success stories which reveals their struggles and strategies to success, it illustrates that, without a clear plan of action and hard work, starting a business is like constructing a castle in the air.

Challenges faced by Startups

In business, reward comes with countless obstacles, specifically if you are starting small with low number of employees, its not just frustrating to handle technically but also can have a bad impact on founders’ physical and mental health.
Lets deep dive into the troubles faced by startups.
Poor management of finances is one of the leading causes of business failure, if the company’s outflows are higher than inflows, there is a huge chance of it to go down. 29% of startups fail due to running out of funding alone.

Overcoming these challenges: To avoid complications related to finances, proper cash flow forecast in crucial. Accurate pricing of your services or products derives the profit and loss of the company.

With the rapidly evolving technology, startup can’t strive without robust IT infrastructure. Not only does it become impossible to handle even the simplest tasks without the latest software and tools but it also increases the risk of data security breaches.

Overcoming these challenges: Startups exploring new technologies gain advantages by partnering with a tech collaborator or by hiring in-house IT experts, they help in Data Analytics; by using right data analytics tools, they use latest technologies that help every department for efficient outcome. Implementation of cloud computing is another benefit, it cuts the cost of IT server maintenance and hardware by securely managing, transferring and storing data over cloud.

ESG reporting consists of environmental factors, social factors and governance, it helps in the management and reporting of non-financial data. However, ESG reporting is something that not many startups are aware of.

Overcoming these challenges: For proficient ESG reporting systems, startups must emphasize on understanding these reporting strategies, establishing connections with other businesses to learn from them, or hiring an accountant which helps to assist ESG reporting along with other financial reporting.

Due to the inflation crisis and fluctuating cost specifically after covid, cost challenges are a huge draw back in startups growth. It includes, increased production cost due to rising prices of goods, supply chain disruptions, labor cost, rent and lease cost, utility cost, tax obligations and currency rate changes.

Overcoming these challenges: With the diversification strategies, risk assessment, managing utility cost, boosting fiscal resilience, focusing on remote operations and strategic marketing startup can overcome these stumbling blocks.

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Employees with lack of experience and knowledge can badly harm your startup growth, and those who fail to grasp your vision and goals present an even greater challenge. With the limited resources it can be really challenging to sometimes look for a team of experts.

Overcoming these challenges: To remove the expertise gap, picking up the right staff is a must, even if it costs you some extra bucks, another thing that can be done to overcome this challenge is developing talent within the firm by it is proper mentoring and training. It is of utmost importance that your first hired team members comprehend the vision behind your business.

Many startups lack the confidence to take risks which become a huge roadblock to their productive growth. Growing a company is an on-going process, which include both market and technology risk, without it, startups may experience slow growth.

Overcoming these challenges: For innovation startups must tolerate a certain amount of risk, by conducting through market research and look for economic trends, Pinpointing target market niches where startups can scale and expand, and building relationship with other service providers, this helps them in evolving their business.

Due to the low budget, startups sometimes neglect on the adoption of strong cybersecurity protocols, leaving them vulnerable to data security risks like losing confidential data, breaches or financial losses.

Overcoming these challenges: By hiring security experts they can overcome this hurdle, yet if its too pricey for the firm then they must educate the employees about strong access controls, data encryptions, strong passwords, using multi-factor authentication and backing up data are key points that can foster trust and prevent legal issues.

Entrepreneurs frequently collapse due to wrong business model with neglecting aspects like inflexible business models, sale, development and staffing plans, and improper risk evaluation.

Overcoming these challenges: A proficient and flexible business plan is the main pillar to a startup success. The business model must be flexible to changing market conditions, trends and consumer behavior. Similarly, the evaluation of risks that identifies possible setbacks and scenario planning which can minimize unexpected barriers in future.

Want to learn more about Challenges faced by Startups? Download the complete guide now!

How a Solid Finance and Accounting Foundation Supports Startups Growth

Effective accounting and finance practices are fundamental to startup growth, they are much vast then just managing cashflows. Most of the startups Lags behind because of not underlining the accounting and finance duties. At times, these practices are tricky and can cost an arm and leg, this may explain why beginners often overlook them. In that case, hiring an external finance and business partners (FB&A) can also be helpful and less expensive than hiring in house experts. Some key ractices emphasized by finance and accounting professionals include,

It is the process of collecting, analysing and managing data of financial transactions. Its helps in financial accuracy and ensuring compliance with laws.

Helps startups understand the tax regulations and requirements which keep them away from penalties

By Proficiently controlling the Capex and Opex, Startups can evaluate if their investments are heading in the right direction.

By forecasting the future Revenues, startups can plan a budget that help capitalize on growth opportunities.

With more scope and exposure in market, finance experts can bring on potential investors.

With the finance experts, entrepreneurs can have a complete professional guidance about their financial framework, this helps them identify their flaws and help in informed decision making.

Want to learn more about Challenges faced by Startups? Download the complete guide now!

7S Model for Startup Success

The 7s model is very widely known for its evaluating and enhancing organizational effectiveness. This model can also be profitable for startups to help them understand the steps to victory. According to this model; Strategy, Structure, Systems, Skills, Staff, Style, and Shared values are interconnected to each other, If one element
changes, it will influence others, subsequently affecting overall efficiency.

 

By coordinating startup business models with the 7S model entrepreneurs can establish an innovative organization. Airbnb, Spotify and Uber are a few of the examples of leading businesses that used the 7s model in their commercial achievement. Let’s examine how this 7s model can assist startups,

7S Model for Startup Success

The 7s model is very widely known for its evaluating and enhancing organizational effectiveness. This model can also be profitable for startups to help them understand the steps to victory. According to this model; Strategy, Structure, Systems, Skills, Staff, Style, and Shared values are interconnected to each other, If one element
changes, it will influence others, subsequently affecting overall efficiency.

 

By coordinating startup business models with the 7S model entrepreneurs can establish an innovative organization. Airbnb, Spotify and Uber are a few of the examples of leading businesses that used the 7s model in their commercial achievement. Let’s examine how this 7s model can assist startups,

Meet the Expert

Sidra Salman

Managing Partner

Sidra Salman, Managing Partner at SS&Co, leading fintech innovation with trust and expertise.

sidra@sscoglobal.com

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