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The last decade has ushered in technological advances that fool us. Some have successfully proposed solutions to the problems they set out to solve for ordinary people. Others received more from the public than they offered. However, none of these advances have made running a business any less risky.
As the year progresses, founders will likely face challenges on multiple fronts. Although there are several technological solutions to help solve these problems, finding the most effective solution can be quite difficult. Also, dealing with multiple issues at once can be a bit difficult to keep in one place.
Throughout the year, I see the following common challenges among founders, and I’ve offered the following practical solutions to ease their transition into 2023 and beyond.
Related: How This Founder Overcame Challenges He’d Never Seen Before
1. Cash flow and financing problems
Cash flow is the lifeblood of a business, and many fail when they fail to maintain it. Also, most startups take a while to start generating cash flow. So they have to find a way to cover the expenses before the money comes in. This is why many early-stage businesses seek investor funding. However, it may not be the best direction to go.
There are often fundraisers when founders start their venture. It’s normal to plan around these cash savings, and they often overestimate the chances of a business turning a profit in the short term. As a result, founders (especially first-time founders) are likely to incur high overhead and pay more in labor costs than necessary. As reality sets in, they may start looking for external funding.
While securing investor financing is a popular practice, it is something you should consider. Founders often make the mistake of giving investors too much capital in an attempt to close funding quickly. Early stage investors can sense your desperation for money and use it to demand ridiculous amounts of capital.
To avoid this, you need to keep your overhead costs low and your labor costs to a minimum. Hire talent only when needed. If a role opens up and you don’t see it relevant for a few months, it might be wiser to work with an independent contractor.
As an alternative to investor financing, consider approaching a local bank early enough for a business line of credit. This will give you some level of liquidity to keep your business afloat. Note that financial institutions do not provide long lines of credit, especially to startups. So, the lower your overhead and operating expenses, the more beneficial a line of credit will be for you.
Marketing, as we know, is critical to business success, but is often capital intensive. Most startups spend up to $15,000 per month on marketing. If you’re a startup founder, you’re probably aghast at how much other startups spend on marketing.
Well, more marketing spend doesn’t always guarantee higher returns. Almost every startup is pressed for money. So your ability to find smart solutions will be very useful.
Instead of creating expensive marketing campaigns, you should consider guerrilla marketing approaches. They often cost nothing to create and can be quite effective.
Also, maintaining a consistent, high-quality blog can help drive more organic traffic to your website. If done right, this traffic can turn into hot leads. There is a lot of marketing you can do on a very tight budget. Just be creative.
Related: No Money? No problem. 30 low-budget marketing ideas for your business
Many founders are against complete transparency in their activities. However, to build a successful company, you need transparency. It doesn’t matter if you get funding from an investor or not.
With investors, there have been cases where bad investors used full transparency against founders in later rounds. On the other hand, opaque startup founders can be suspicious.
With high-profile cases like Elizabeth Holmes (Theranos) and Sam Bankman-Fried (FTX), investors have become more wary of opaque founders. This can often lead to them demanding significant control over your business. Embracing a culture of transparency can facilitate their due diligence and build trust.
Speaking of trust, a study by HBR found that founders are more likely to attract top talent if they build a more transparent workplace culture. So why not consider stripping down your activities and hosting comprehensive meetings that encourage collaboration and foster engagement?
4. Burnout epidemic
When building a startup, you can easily find yourself working unusually long hours. Most startup founders work around 80 hours a week. The body needs some rest, food, sleep and distraction to function properly. Unfortunately, most founders do not give their bodies enough of these.
The interesting reality is that this unhealthy behavior rubs off on employees. When employees see their leaders working long hours, they are motivated to do more. Soon, this unhealthy behavior becomes a workplace culture, and productivity can take a nosedive.
Alternatively, you set fixed working hours for yourself and your team. Ensure everyone on the team gets adequate rest. In addition, you should prioritize your health. A simple solution is to leave your computer at work and keep it out of reach outside of business hours. So you can find some time to relax and find balance.
Related: 3 Ways to Stop Founder Burnout in Its Tracks
5. Diversity and Inclusion
There have been fewer good moves, especially from the need to have a diverse and inclusive workforce from the start. However, many startups find it tempting. Release DEI initiatives for established organizations. Instead, focus more on objective work.
As a startup, you need talent for the value they bring to the team, regardless of race, culture, or gender. Don’t get caught up in the need to be inclusive because you start losing valuable talents in the process. If you hire with merit and see that your team is diverse, great. Otherwise, leave the DEI initiative until further down the road.