Startup owners are well-known to be creative, talented, and resourceful people who don’t do everything by the book. Adaptability is one of their strongest attributes, allowing new business ventures to bounce back after financial struggles. This article can be helpful for anyone interested in putting their minds together and launching a business regardless of the odds.
Challenges threatening any startup
Startups face many obstacles, such as securing funding and grasping different means of finding potential investors or donors. Given the demand for professionals, even gathering a well-rounded team can cost much more if you wish to match offers in the market.
Then, not all approaches to your product or service will work, with some costing a lot but bringing little to no value. In addition to sustaining your business, you naturally intend for it to grow, which also requires significant funds for expansion.
So, what if your startup experiences some dark times, be it unexpected costs or challenges in securing or maintaining funding? Here are some recommendations on how to overcome this slump.
Be wary of the burn rate
Startup owners might want everything all at once: a modern office and a fantastic team to cover everything. However, to avoid financial struggles, it’s crucial to establish your priorities, such as your critical tasks and jobs. You might need a graphic designer to produce visuals for ad campaigns or email newsletters. But it might be better to find a professional freelancer and cooperate with them, paying only for the work you request. Therefore, hiring people only for critical roles.
Consider alternative funding options
Landing investors is challenging, from delivering the perfect pitch to finding people who connect with your product. While you need traditional funding approaches, the alternative can be just as rewarding, if not more. For example, crowdfunding has been a blessing for thousands of businesses in generating funding for their goals.
Additionally, you could attract potential investors through peer-to-peer lending. Such websites connect various people who might be interested in helping people or startups. Then, lenders receive an interest rate and settle on when the money should be repaid.
Startups can also sell digital products for alternative earnings, license their expertise, or turn to various options for free money. For example, that could mean renting out unused space in their office or even sharing unused internet bandwidth. Besides these options for extra income, startups could:
- Review the options for selling or sharing company data. This could include non-sensitive user data, various market insights, and behavior insights. Of course, doing this ethically and complying with applicable regulations is crucial.
- Running workshops or business insights could generate additional income by monetizing your knowledge. Maybe you might elaborate on what approaches work and don’t work for startups.
- White labeling could be an alternative business path. In this case, you sell your product to other companies (with options to customize or rebrand their look).
Cut down expenses
Startup owners should carefully review their budget and spending to find unnecessary expenses. For example, purchasing high-quality software and paying subscriptions could facilitate smoother workflows. However, you might find more affordable free alternatives in the market.
Rethink your monetization
Sometimes, your product or service does not perform as well as competitors (even if your offer is better). Your goal is to understand why, and while the reasons can vary, your chosen monetization approach could be the reason. For example, you have different options, such as subscription models, one-time payments, or freemium models.
A tech product could have different subscription models or offer its services fully after clients pay for it once. But let’s say that your product is relatively niche, and while you have many potential clients, it is not the same as having millions of users as your potential clients. The one-time payment option might not work best because you want repeatable income. You can also justify this decision by continuously polishing and updating the product.
Conclusion
Startups require a lot of management and critical thinking from their owners. It’s crucial to understand your priorities and focus on the lean approach instead of splurging. Be very careful with your money management, and, to avoid financial struggles, keep costs low while also paying attention to ways to generate additional income from your current assets.
Photo by Mohamed_hassan; Unsplash
