3 Major Obstacles Start-Ups Face and How to Overcome Them
With the advent of increasingly simpler technologies, Home Security is a growing industry, full of exciting changes and new opportunities for start-ups. But with the potential for success comes obstacles companies will need to overcome to become successful in the field. These are three of the major hurdles most early stage companies will need to overcome:
1. Funding
Without cash in the bank, an investor or a loan, your business may not have the means to go from dream to reality. Finding the best way to get start-up funding can make all the difference, small business loans and 401k rollovers are two common sources of start-up funding. Small business loans are most often obtained through the SBA. There is also what is known as a Rollover for Business Start-ups (ROBS). With this arrangement, you can invest your 401k money into a small business or franchise without taking an actual loan or a taxable distribution.
Regardless of whether your plan is to start a new business, buy into an existing one or expand the one that you already have, an ROBS be a great way to fund your venture. Most savings plans are eligible for this, including 401(k), 403 (b), traditional IRA, Keogh, TSP and SEP.*
For more information on potential sources of funding, read our whitepaper, Alternative Funding Sources for Your Business, here.
2. Competition
The competition is fierce for two reasons. First, because there are traditional, well established brand names with large customer bases that can be difficult to crack. Second, newer, lower cost technologies coupled with access to money have lowered the barriers to entry. Because of this opportunity, more entrepreneurs are vying for those customers that are willing to try new, relatively untested technologies. So don’t try to one-up the big-name companies. Instead, find your own unique niche and highlight the features that differentiate your startup from others in your industry. Make local contacts, get out on the ground, shake hands with your customers, and make sure your clients know that your size allows you to provide a personal touch they can’t get elsewhere. Look for alternative ways to enhance the products and services you provide rather than competing directly with your competitors.
3. Scaling
In the early stages of your start-up, you’ll likely have a hand in it all. While you may enjoy a brief period where you’re able to manage all aspects of the business, it’s important to recognize that a successful business model requires growth. You can’t always predict when your company will hit that growth spurt, and rapid growth often leads to growing pains such as insufficient supply or software that’s strained beyond its capacity. The best way to manage growth is to prepare for it from the beginning. Choose small business accounting software, phone systems, and manufacturing solutions with optional features that will allow it to grow with you. By thinking through the systems that will scale with you, you won’t have to switch suppliers to accommodate your growing needs.
In addition, you’ll need more people. When you’re hiring employees, make sure you choose those who find a challenge invigorating and not upsetting. You want employees who are persistent, aggressive, and dedicated, so they can weather both the ups and downs that you’ll experience with a start-up.
Finally, don’t be afraid to pivot. If one idea isn’t working, you may need to look at your business start-up through an alternate lens. Sometimes, the smallest tweak can make the biggest difference. Beginning your business with your eyes wide open to these challenges will help you build the foundation you need for success from the earliest days of your business.
*ACA does not endorse any specific funding option. As with any investment option, it is recommended to consult with an investment professional