Technology seems to be the industry of choice for many of today’s aspiring business owners. This is a broad and rapidly growing field that attracts investors and venture capitalists, and the potential for huge returns if successful.
While it’s easy to understand the appeal of starting a technology startup, some entrepreneurs fail to consider the unique risks they face in the competitive world of technology. Here are his seven challenges you’re likely to face and how to overcome them.
These common challenges are familiar to many technology startups, so it’s important to be prepared to overcome them before launching your business.
constant change
Rapid change in technology is more pronounced than in any other industry and can seriously derail a startup’s trajectory. As many technology entrepreneurs know, there is tremendous pressure to move quickly towards solutions and outperform the competition. [Read related article: Business Plan Templates for Businesses]
“If a company is not agile enough or unable to execute on ideas quickly enough, opportunities are very likely to be closed before the product or service can reach the market.” said Andrew Van Noy, CEO of e-. his Warp 9, a commerce solutions provider; “Don’t be fooled if you feel like you have a solution to a problem that hasn’t been addressed yet in the market. It won’t be long until someone else does it.”
But being first doesn’t necessarily mean victory, Van Noy said. If a product or service doesn’t yet exist, blazing a new path comes at a high price, but subsequent entrants often gain advantage where the first entrant is unavailable. You can get To assess where you stand, Van Noy advised technology startups to seek feedback on their ideas, goals, and path to success.
“You may have a great business idea, but you may end up coming back out of the clouds,” he told Business News Daily. “Get feedback from friends and relatives about your ideas and take their criticism seriously. Be realistic about how much time, money, and energy it will take to make your idea a reality. Others Talk to founders and leaders to find out how long, hard, and expensive it was for them. Entrepreneurs who thought it would be easy have their dreams and savings crushed. There’s nothing sadder than seeing that.”
unable to achieve initial goals
Technology changes so quickly that there’s a good chance your startup won’t be able to complete what you originally planned. Rather than accepting failure or pivoting, many startup founders simply let their business stagnate.
“Too many startups end up in a ‘zombie’ state,” said Sean Livermore, founder and CEO of outsourcing platform Ziptask. “Founders don’t want to give up and are embarrassed to admit defeat. So they keep dreaming but never actually complete what they set out to do in the first place.” Don’t worry if you don’t have one. But in a startup, not completing something means leaving the door open to life, and that’s worse than failure.”
According to CB Insights, 20% of startup failures are due to the business losing out to competition.
Finishing what you start is a good rule of thumb in many situations in life, but it’s especially true for tech startups. If you feel like you are going to fail, give yourself permission to fail.
“If you fail, try again, but do it sooner next time,” Livermore told Business News Daily. “Ziptask started, failed, pivoted, restarted, failed, pivoted, restarted, received investment, succeeded and is now growing. It took a solid effort.”
Partnership decisions
For new businesses, partnering with another company in a related field may seem like a great way to grow. But the stakes are much higher for tech startups, who can easily derail their businesses by capitalizing on fads.
Chris Miles, CEO of Miles Technologies, a business software provider, said: “The technologies that are mainstream now could be eliminated over the next few years.” “I have seen many companies develop entire product lines and build services and solutions based entirely on emerging or popular technologies. [fads] Go away, everything will melt. So what? You must make healthy and wise decisions. ”
When choosing which companies to work with, having a clear policy on this issue will help you make the best decision for your startup. For example, Miles’ company chooses to work only with large, established companies that have a good chance of longevity and success. Conversely, some entrepreneurs have discovered that large companies can steal their ideas and reproduce them at low cost.
“When building a business, it’s important to focus on putting policies in place to reduce risk,” Miles said. “Entrepreneurs always take risks. But when you have policies in place to guide your decisions, you don’t have to roll the dice and hope for the best.”
Creating a business partnership agreement can alleviate many of the pitfalls encountered in partnerships. These agreements serve as a roadmap for how to navigate difficult decisions and resolve disputes.
employment
Hiring employees can be a nerve-wracking experience for any startup, but tech startups often hire too many people before they’re ready. Even if you have investor money, problems can quickly arise if you reduce your resources too quickly.
“Technology startups are growing rapidly and attracting huge amounts of funding, but it’s difficult to keep pace with that growth,” said William Zhou, CEO of education technology company Chalk. . “Technology startups are notorious for overscaling and hiring too many employees prematurely. They always hire slow and fire early.”
Another problem that new technology companies can face is the inability to hire top talent in a startup environment.
“Cash flow is one of the biggest problems every startup faces,” said Matt Peterson, founder of app developer Shiny Things. “Big tech companies in Silicon Valley can pay much higher salaries than local startups can pay. When you allow your team to have freedom and creativity on their projects, they get a lot of satisfaction.” team is less likely to participate in the project. [to a larger company]”
cyber risk
While nearly all businesses rely on the internet to some extent, restaurants and brick-and-mortar retailers don’t face the same cybersecurity risks as startups that operate entirely online. Most often, technology startups serve his B2B market. This means other businesses rely on your business to keep things running smoothly.
Eunice Lim, sales director at insurance company Travelers, said: “High-tech companies provide products and services that help other business owners perform their jobs, so they can be held liable for omissions, errors and other risks. There is a gender,” he said. “To overcome potential losses, you first need to make sure you understand those risks.”
Comprehensive firewall and antivirus software systems reduce many cyber risks, but their effectiveness is limited. Mr. Lim trains his employees on the proper protocols for handling sensitive customer information and credit card information, and ensures that corporate data is always only accessed via a secure, private Internet connection. We recommend that you do so. Adding a cybersecurity policy to your insurance plan can provide protection in the event of a data breach.
Technology startups can face tougher competition and unique challenges than startups in other industries, but ultimately your level of dedication to your new business will determine your chances of success. .
“The chances of an individual building a market-leading company from scratch are slim to none,” says Jeremy Corres, founder of VentureCloud, an Australian equity crowdfunding platform. “Delusion won’t get you there. It takes skill, persistence, and a little time and luck.”
try to do everything yourself
When you start a business from scratch, it’s hard to let go and ask someone else to help you. After all, it’s your brainchild and you know best, right? Wrong! At some point in your company’s growth, you will need to identify and hire a management team to fill gaps in knowledge, skills, or time. In fact, CB Insights research shows that 5% of startup business failures are caused by founder burnout.
You may be the technical genius behind your product, but you’re also that rare founder who excels in engineering, management, operations, finance, sales, and marketing. Even if you have great skills in all of these areas, you still need to decide which job functions are most important to your company’s success, spend time on them, and hand over less important tasks to your team.
According to data published in Entrepreneur magazine, founders spend 40% of their workday on non-revenue-generating tasks such as hiring, human resources, and payroll.
As your company grows, you may find that you don’t have the skill set needed to take your business to the next stage. At this point, venture capitalists and other investors will want to bring in a management team with experience in large companies. Although it may be uncomfortable, it’s best to be open to working with outside executives. Working with these people gives you the opportunity to communicate the importance of your values and company culture and make them stick over time.
Ignore marketing and market research
The “build it and they will come” philosophy only works in fiction. A best-in-class product that solves a problem does not guarantee business success. In today’s competitive technology environment, success depends on a combination of superior products, effective marketing, and rapid market saturation to deter imitation and establish a critical mass customer base. Technology startups can increase their chances of success by investing early in market research and analysis beyond the product development stage.
Once you identify your target market, how they perceive your product in comparison to their own market and competitors, and what’s important to them, you can figure out how to reach that market and how to price your product. You can see. During product development, pre-launch beta testing can improve the user experience, reduce customer frustration, and eliminate bugs. Market research also provides insight into whether you can create other types of products or enhancements to meet customer needs in the future.
More than 6 in 10 tech company leaders say they expect market unpredictability to be their biggest challenge over the next three to five years, according to Hinge Research Institute’s High Growth Study . More than half agree that changing the way buyers purchase services is a major challenge. To meet these requirements, companies must conduct continuous market research. That way, you won’t be blindsided by competing products or market changes.
Jennifer Dublino contributed to the writing and reporting of this article. Interviews with her sources were conducted for a previous version of this article.
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