The Challenges Startup Companies Face

Startup companies are newly born companies which may struggle to exist. These companies are formed based on intelligent ideas and grow to succeed. These companies or startup entities have their lifecycle. The first stage is the bootstrapping stage. In this stage the founder or the entrepreneur starts a set of activities to turn his idea into profitable business or company. The entrepreneur faces a higher risk and uncertainty levels, continues working on his new idea, making teams, asking family members and friends to invest in his idea and using his own funds. Bootstrapping is defined as the creative ways of acquiring the use of resources without borrowing, is considered the most area of entrepreneurship that needs to be addressed. The second stage is the seed stage. The founder enters a new stage after the first stage. This stage is characterized by many things, team work, entry into market, prototype development, seeking for support mechanisms.

For some or most startup companies, this stage is a mess and considered as highly uncertain. Many startup companies fail in this stage due do the lack of support mechanisms and if they did not fail they turn into low profit companies with a low rate of success. However, companies which in receiving support would turn into profitable companies. The third and last stage is the creation stage. This stage occurs when the company sells its products, hires first employees, and enters into the market. There are some common challenges that face every startup company but the extents to which they affect startups are different. Here are some challenges.

1. Financial challenges: finance or money is an essential part for any start company. Any startup company would face financial problems for many reasons and in many stages. The founder will need finance in the bootstrapping stage, when he/she negotiates with the investor to pay and invest his money in his/her idea and project. After that, in the second stage (seed stage) the founder must look for angel investors and convince them with reasonable plans. In the creation stage, the founder should prepare a plan that would be supported by documents to take advantage of the capital.
2. Support mechanisms: support mechanisms play an important role in the startup of any company, for example, angel investors, incubators, science and technology parks, accelerators, small business. Any lack of one of these mechanisms might lead to the failure of any company.
3. Human resources: companies normally and usually startup with one founder, but after awhile, the founder needs more experts to develop his company. Then he has to sit with people and convince them to work in his project and make a team. This step is so difficult and hard to succeed and the whole project might fail due to failed human resources management.
4. Enviromental elements: any startup companies fail because of the lack of attention to environmental elements. For example, legal issues and limitations in the market. A supportive environment facilitates the success of any startup company. The startup environment is more critical and difficult than for an established company.
5. The market: the markets move fast and are difficult to predict, some founders or mangers of the new companies might get their attention only on starting up and enlarging the company without paying attentions to the moving parts of the markets and the competitors around them. This may lead to a huge failure.
6. Marketing: the company must have a well established marketing plan through banners in the streets, social media, advertisements, if there is no marketing plan the company will face difficulties to be known. Through few steps the founder can guarantee the success of his marketing plan, evaluating the marketing strategy and choosing the right plan for the company.
7. Time: choosing the wrong time to establish a company might lead to its failure, for example establishing an expensive company due to bad economic or recession in the country which may not lead to a good revenue.