By Aunkur Arya, GM of Mobile at Braintree
Lifting your business off the ground is a tricky task. According to Allmand Law more that 50 percent of all start-up businesses fail within the first few years. Entrepreneurs have a challenging task: juggling resources, raising finances and standing out in a highly competitive crowd. There are numerous stumbling blocks for startups. Here I will talk through the seven most common roadblocks and how startups can best avoid them.
1) Building a Pipeline of Talent
While capital and ideas are in abundant supply, the problem of talent acquisition is becoming more acute.
One solution: Build an intern program early. Baseball teams use a similar method. It’s called a Farm System. They invest millions annually to find and develop the best prospects. Startups can take the same path by investing early in paid internship programs. These typically require less capital than other recruiting and talent-acquisition efforts and can produce a steady stream of great engineers and strong evangelists for your brand back on campus.
2) Staying Humble and Grounded
The startup ecosystem has a vanity problem. Many entrepreneurs who raise money and attract the market’s attention early find themselves the object of affection before they’ve made their first dollar. It’s only partially their fault -- the tech ecosystem can be an echochamber of praise for unproven ideas.
This is why it’s so important to stay humble. With rare exceptions, the most impactful companies were built by people who kept their head down and solved problems. Focus on building a meaningful product and business. Play longball. Present yourself as a valuable player that fills a distinct market need, not the next “Uber of” whatever.
3) Discounting the Advantages of Global Scale
Starting a business in the U.S is hard, but understanding how to scale a domestic opportunity across different markets takes intense focus. Too often, companies don’t anticipate how crucial international expansion is for the long term viability for their startup.
The best way to avoid this one is to prepare for global expansion early and build a technology that’s easily adaptable for updates, scaling and expansions. Companies like HotelTonight and Airbnb started with this approach and understood the importance of partnering with supporting companies, such as Braintree, to scale globally both quickly and efficiently.
4) Maintaining burn vs growth
For a young company, every decision is a big one because you’re working with a limited amount of money and resources. Entrepreneurs need to quickly become good at making tough P&L decisions and deciding between things the company really needs to achieve its goals and things it would just be nice to have.
5) Outsourcing stuff vs doing it yourself
Startups are originally created to fulfill a need or solve a problem, but once the company is up and running there are many other functions, like payroll, communications and payments, that shouldn’t necessarily fall on your dev team.
This is where startups need to take advantage of platform companies with expertise in the areas where they need it. Good examples include Parse, Stackmob, Twilio, Braintree, Harvest and many others.
6) Don’t be afraid to change course.
One of the perks of being a startup is that you’re small enough to change direction if you see a better opportunity elsewhere; you don’t have to be married to the original vision of your company. Once you get your team together and start to test and iterate, you can identify opportunities for growth you couldn't see before.
My advice is to jump at these sorts of opportunities when you see them. Slack, one of the hottest B2B tech startups of the moment, was originally a gaming company. It wasn’t until they pivoted toward the enterprise social networking space that the company really took off and grew into the powerhouse it is today.
7) Ignoring the fundamentals (they still matter)
Startups are different from large corporations in many ways, but even the coolest, hippest new companies still need to pay attention to the fundamentals of business. No amount of futuristic, open concept office spaces or free catered meals can replace the value of a solid business plan. Maintaining solid profits, revenues and liquidity rates should be high priority and will make your company all the more attractive to investors and potential partners.