Startups have been the media darling of the last decade. Facebook, Airbnb and Uber all seem like runaway successes. But how easy is it to start one ?
Startups seem to permeate almost every strata of the media in recent years. From the eccentric tech geniuses that founded them to the innovative products they produce, startups seem to be all the rage. It also seems to be changing the job market as many young professionals are choosing self-employment and entrepreneurship instead of traditional jobs.
But, although we constantly hear startup success stories, we seldom hear about how hard and risky it is to start a startup. Hopefully this article will give you a more complete view of startups and some of the obstacles you may encounter.
Timing Is Everything
This is the new updated 2.0 version of “Location, Location, Location”. Timing is everything, it can ensure the financial backing of venture capitalists or make them scoff at very the mention of your idea. Let’s take for example V.R. technology. Before Oculus Rift and its subsequent purchase by Facebook, few companies would be interested in an idea that was a failed toy of the 80’s and 90’s. Today even though the technology is considered profitable, because Microsoft, Sony and other large technology companies are now developing thier own V.R. devices, you wouldn’t be able to compete.
For that golden period immediately preceding the purchase of Oculus Rift and possibly shortly after it, you could propose anything with VR and you would find investors throwing money at you (and your startup). Another great example is Bill Gates, when he started developing a much more user friendly interface for computers, the industry was fertile and ready for it. If he came up with the idea too soon, the technology wouldn’t be able to run it properly, making it fail or if it came later, there would be someone to compete with.
Timing is everything, so if you have a product which you believe in, you might have to wait until the industry is going through a crisis or until there is renewed interest in the type of product or service that you are going to sell. Would I be typing this article on a Windows machine had Gates been a decade or two late?
A lot of startup owners think that they’ve accomplished their goal when they receive financial backing. In actuality this is when things get infinitely more complicated. A very precise and complicated budget needs to penned and adhered to guarantee success. Unfortunately, this is a common pitfall for startup owners. They see huge amounts of money and feel that they couldn’t spend it all even if they wanted to. Many new startup owners also make the mistake of trying to do their own budgeting and sadly fail. It can be frustrating and a little scary turning over the reins of your new company, but it must be done to guarantee or at least give you a fighting chance.
There are ways that you can help control some of the costs that you will encounter when first launching your startup. Contracting freelancers to do work that is either a one time job or something that needs to be done periodically can help minimise certain costs, because you won’t need to employ somebody full time to do the work. Distance workers will also put a lower strain on your physical facilities as you will not need a workstation for them or have to pay for the utilities that they will use.
Although you might assume that one of the biggest challenges when building a startup is training the people around you, the person on your team you need to be most weary of is yourself. This is especially true if you recently left less than favourable conditions from a previous place of employment. It might be hard at the beginning to work extra hours and overcome the impulse to skip work because “you’re the boss” but remember that the boss is the one that has to do the most work the majority of the time. Especially if the idea, product or service you are trying to sell is of your own design and conceptualisation.
Not only will you have to train yourself to be your own worst boss, you will also have to deal with your tendency to spend superfluously. Sticking to the budget you have established is difficult. There are things you will need, that will make your job easier and will make your employees happier. But, you will have to hold off until the budget allows you to buy them.
Another part that many articles, advice columns and statistics ignore is the psychological effect purchasing, more colloquially known as “retail therapy” can have on you. Starting a business can be immensely challenging, it can be mentally, emotionally and physically draining. Although it won’t boost your energy levels or cognitive abilities you might be tempted to purchase items to help you counterbalance the negative feelings you might be feeling.
Often purchasing things is a manifestation of visualising yourself in better circumstances. For example, if you are making do with an out-dated piece of equipment, you might imagine yourself being so successful that you purchase the updated version. When you do make the purchase, it can make you momentarily feel like you are in a better situation than your finances show.
Dynamic And Flexible
As with the beginning of any interpersonal relationship you will need to by dynamic, adaptable and flexible. An established business is expected to be extremely variable. Now imagine how variable company that might not even have any constants needs to be. Although you might come face to face with multiple unforeseen variables, if you and your team stay fluid and dynamic you should be able to overcome them.
My favourite example of this is Netflix vs. Blockbuster. Blockbuster for those of you that don’t know was a video rental retailer that began in 1985. After 26 years though a small company called Netflix, that was a mail-order DVD rental service forced Blockbuster to declare bankruptcy. Blockbuster stuck to its business model until almost the bitter end, where in a ditch effort to stave off the inevitable they started their own mail-order DVD rental service.
Netflix on the other hand has not only pivoted they redefined their industry. For example, when Netflix was moving over to streaming their video content, they announced that their physical disc rentals branch would be renamed Qwister and carry video games for an extra fee. When the customer were dissatisfied by the change, Netflix changed Qwister back. Later on, continuing their rapid adaptation the company even started developing their own critically acclaimed video content.
Have you even built or launched a startup? To you have anything you would like to add to this article? Please let us know in the comments section below.