Some startups catapult to the upper echelons of success and profitably rapidly, and others seem to lag far behind the competition. If your startup falls into the latter category, you understandably may be searching for problem areas that you can focus on. Each startup has unique circumstances and challenges to contend with, so you will need to analyze your operation and processes carefully. However, these are some of the more common reasons why startups today may falter.
Failing to Invest in Marketing
The success of a startup is often measured by profitability, escalating demand, growth into new markets and more. When you follow these factors back to their roots, you will see that they are all impacted heavily by your marketing efforts. Some entrepreneurs invest moderately in marketing because of a tight budget, but this is often ill-advised. Remember that marketing drives sales and directly affects your bottom line. More than that, marketing can establish brand recognition, promote loyalty and more.
If you have identified that your sales numbers are lower than projected, take a closer look at your marketing efforts compared to the competition. It may even be financially beneficial to hire a marketing consultant. A professional may be able to develop a more cost-effective plan that can save you money while generating better results.
Not Focusing on Sales
Marketing generates leads, but this is only the first step in the sales funnel. Your company needs to be effective and efficient at converting leads to sales. In addition, new customers should be converted into repeat or established customers. If you have determined that your bottleneck is not related to marketing, sales issues may be the problem.
Many entrepreneurs handle sales efforts on their own initially, but it may be beneficial to hire an experienced professional with a background of generating proven results. On the other hand, you may have a sales team that is not effective. If this is the case, you may need to invest in sales training or replace some of your staff with more productive professionals.
Making Poor Use of Technology
Modern technology has transformed the way companies do business. It can streamline operations, improve communication, bolster efficiency, promote excellent customer service and more. Your competition may have an edge in the marketplace if they are using the latest technological solutions and you are not.
Take time to explore the many technologies available for communications, online marketing, sales efforts, financial management, remote team management and more. The right combination of technologies may help you to better organize your operation. This can save you money and improve efficiency at the same time. As a result, you may have more money available to spend on marketing and more time available to focus on sales.
Lacking Adequate Capital
When you launch a startup, you ideally should have a detailed plan for generating stable profits within a reasonable period of time. You also should have adequate capital to pay for overhead until you reach that point. When you lack capital, you may not be able to market as heavily as you need to. You may not have the financial means to hire more staff and meet demand, and this can have a negative impact on public image and profits.
These are only a few of the negative effects associated with a lack of adequate capital. The reality is that you need money to make money in today’s business environment. If your growth opportunities are stymied by insufficient funds, consider looking at funding options. These may include taking on a silent partner, applying for a small business loan, using crowdfunding and more. As important as it is to have access to working capital, review the short-term and long-term effects on your company before making a significant financial decision.
Analyzing your startup from an unbiased perspective can be challenging, but your ability to accurately identify your company’s specific challenges is an essential first step toward turning your business around. A smart idea is to explore these common mistakes in relation to your business, but be open to the possibility that you are making other mistakes as well. After identifying potential solutions, consider updating your business plan to address these and other mistakes head-on going forward.