To give you an understanding of the topic at hand, let’s begin with the basic definition. A startup company is referred to as a business scheme devised for the introduction of a newly developed, flourishing enterprise that presents a market economy with a product or a service intended to meet the needs of the targeted consumers. According to Forbes, 543,000 businesses get started each month and eight out of every ten of those entrepreneurs fail within the first 18 months (Bloomberg). Launching a startup company isn’t as simple as holding a bake sale for a noble cause. If you’re planning on pushing such a company off the ground, you’ll be faced with numerous ups and downs. Some of them are mentioned in this article to give you a gist of the victories and defeats entrepreneurs face in their everyday lives.
Low- Finding the Wrong Motivation
The first step is always searching for the right channel through which you’ll gain the inspiration and energy to keep you pushing forward through the years. A rude boss, minimal paycheck or an offensive colleague are never the right reasons for starting your own business. If you’ve chosen one of the above as your main reason for launching your own company, within the first year, your stimulus will burn out. Not only will you hit a low point, your entire business could collapse. Many startups face this issue in their initial years. To keep your business climbing the ladder of success, remember not to choose the wrong motivation or this could eventually lead to defeat. Passion is important but due to the lack of guidelines, principles, blueprints or a convincing prototype, many ideas don’t hit the market- despite being absolutely brilliant. At which point, backing that motivation with the right resources is just as important.
“You never want to start a company as a reaction to a bad situation. You need to have an idea you are really passionate about, or you’ll never make it through the first couple of years, which are extremely tough.”
- Ashish Toshniwal (CEO of Y Media Labs, which developed mobile apps for PayPal, eBay, Bank of America, Symantec)
High- Finding the Perfect Motivation
On the other hand, if you’ve found just the right reason for launching a startup, you’re good to go. Not only can this push you through the many hard times to come but it’ll also make you view any difficulties you face in a positive and optimistic light. Although hard work is seen as the key to success, motivation is what drives that hard work. Take the example of high school dropouts, for instance. 40% of high school students are chronically disengaged from school (2003 National Research Council report on motivation). Every year, over 1.2 million students drop out of high school in the United States alone. That's a student every 26 seconds – or 7,000 a day (Tony Miller on "Partnering for Education Reform." U.S. Department of Education. Accessed on February 18, 2015). Why? Because they haven’t found their beacon of energy which pushes them forward. It’s the same case for startup companies. If you’ve found the perfect motivation, you’ll avoid this entire mess and face each day with the driving force to reach new heights. Giving up won’t be an option for you so remember, if you’re going for a new business venture, the first step to succeeding is finding that perfect inspiration.
“I believe that when we are passionate about something we have more energy, we work much harder, we get more creative, we search more diligently for solutions when difficult problems arise, and we inspire others who work alongside us.”
- Amy Rees Anderson (Founder/Managing Partner of REES Capital. Founder and CEO of MediConnect Global, Inc. and IPOP Foundation)
Low- Facing Financial Issues
No one’s a born businessman and handling the financial dealings of a startup company is one of the major issues you’ll face. According to a U.S. Bank study, 82% of business failures are due to poor cash management and financial crises. 27% (1 in every 4) of businesses surveyed by the NSBA claimed that they were unable to receive the funding they needed to begin their startup companies. Although passion and motivation are the first step of the stair, good finances are what take you the rest of the way. A startup company based on shaky financial grounds will likely collapse under a mountain of debts and loans within the initial years. Unless you begin your company with sufficient funds, to make up for the costs until you begin receiving profit, you’ll face an extreme decline in your endeavour. Hitting a financial crisis will not only be a tremendous low point for your company, it could lead to its eventual annihilation. (According to the Wells Fargo Small Business Index, $10,000 is the average amount of startup capital required by a small business owner while Kauffman Firm Survey suggests that the figure is likely around $80,000.)
High- Having a Unique Idea to Bring to the Market
In 2010 there were 27.9 million small businesses in the world (U.S. Census Bureau- International Trade Administration; Bureau of Labor Statistics). This figure does not include the numerous multinational and international enterprises present. In face of such a staggering figure, one factor allows you to succeed- bringing a unique prototype (or service) to the table. People don’t pay for the things they already have. If your startup company is based on something that is unique and in high-demand in the market you wish to target, chances are you’ll succeed. Take the example of Apple Inc. for instance. In 1984, Apple launched the Macintosh, the first personal computer to be sold without a programming language. They had a vision that had no parallel and they delivered it to the masses- bringing a revolutionary change in the world. The Apple Inc. symbol today is seen as a luxury and in February of 2015, Apple became the first U.S. company to be valued at over US$700 billion.
Low- Downsizing, Cutbacks, Layoffs
One of the worst experiences business managers have to go through is having to let workers and employees go. This may be for a number of reasons including debts that have to be paid off, lack of profits due to plummeting sales, positions being cut because of over-staffing, a change in roles brought about by mergers with another company or a technological advance in areas where working hands are no longer needed. At this point, the entire workforce is stressed. It causes a strain in not only the employer-employee relationship but also between the colleagues working together. This event is unpleasant for all and can amount to a depression in the company’s success rate. Along with the psychological impact a recession may have, there are numerous physical ones as well. According to Leadership IQ (a leadership research and training company study of over 4,000 employees in 319 companies), 74% of employees who kept their job amidst the recession report that their own productivity has declined since the layoffs and 69% said that the quality of their company's product or service has declined. At this point, it is vital to remember that not only is the company struggling to hold its ground but the workers amidst its walls are also facing low points in their careers.
High- Earning a Good Reputation
Being known as unreliable and cheap is never good for a startup company. If you’ve earned a good reputation amidst your consumers, this can result in flourishing sales. Darrah Brustein, the founder of Network Under 40, answered the following question in one of his articles:
What form of currency never fluctuates with the market?
Answer: Your reputation.
A reputation can be formed through sincere and genuine work over the span of a few/many years, depending on how your consumers perceive your actions. Some of the ways of doing that include doing what you say you’ll do and going out of your way to help others. Being consistent, acting with integrity and loyalty and making the consumers feel as if there’s nothing you’d like to do more in the world than address their problems- all of these can result in a firm reputation that’ll aid your company. In this process, establishing a positive relationship with employees from day one can also contribute tremendously to the well-being of the company/business. After all, these same employees can be consumers of your goods. When hard times hit, customer loyalty is one of the main uplifting factors and to earn that, having a good reputation is key.
Low- Having the Wrong Business Partners
It’s a universal rule that never go into business with your friends or family. Dana Severson, the co-founder of StartupsAnonymous, witnessed this firsthand and wrote an article based on this life-lesson. An excerpt from her article is given as;
“In late 2007, after 20 years of operating a business together, my father's childhood friend, and business partner, went behind his back to remove him from the company they started together. That wasn't the worst of it though. He did this while my dad was taking a leave of absence from the company because of a brain tumour.”
Having the wrong business partners may include starting a company with the aid of family and/or friends. When starting a business, one usually turns to close relations for support and cooperation. A Harvard Business School professor, Noam Wasserman, studied nearly 10,000 founders of technology and life sciences startups and found that the least stable among those teams were friends. One of the reasons behind this is lack of effective communication. Adopting a business tone with a close relation is difficult to do when the bond is emotionally deeper.
Although there are innumerable highs and lows a startup company will face during its years of life, having faith in your startup will surely help you conquer each obstruction and celebrate each conquest. Being confident in what you do will allow you to convince yourself and others around you that you can steer your boat through high waters. Being in a state of self-doubt will ruin your business. When you start out in this industry, with defining competition at every turn you take, you shouldn’t fear the lows; they’re inevitable. But with enough drive, time, and effort, the highs will come. Given the points above, they’re nearly balanced out for every startup company. The only difference is learning from the valleys and not letting the mountain peaks cripple you.
“Running a startup is truly like riding a roller coaster that doesn’t stop. I’ve had some of the highest highs and the happiest moments I could remember while running my business. But it also comes with some of the lowest lows, and I’ve endured many sleepless nights. Rarely are there any feelings in between, but I think it’s important to celebrate even the smallest of victories.”
— Ross Cohen, Founder of BeenVerified
Also published at: https://khansink.wordpress.com/startupstruggle/