A number of times this year, we have heard of startups closing up for one reason or the other. According to research, this year (2023), about 90% of startups have stopped working. The statistics further stated that first-time startup founders have only about an 18% success rate. While this may not be the plan all along, sometimes founders are left with no choice. Running a startup is not one without ups and downs; It may look glamorous on the outside but the owners can often be stuck on roadblocks.
These roadblocks are not peculiar to a certain startup as they are common and can affect any type or niche of business. Mind you, the challenges faced by startups do not happen because founders are incompetent but because startups are inherently risky to start.
Read Also: Core Differences Between a Startup and a corporation
What are these challenges faced by Nigerian Startups?
Startups are strangers trying to ply a route for the first time and this means that, along the line, they can fall, hit their heads on the wall, and even get stuck before they eventually find their way or not (because it’s not exactly easy). So, if you are thinking of building a startup, that’s one “risk taker” right there! – You. Preparing your mind will help you to do even better, so here are the most common challenges that startups face when they come into the market;
Competition
Last year, the number of startups in Nigeria exceeded 3500 which means that this year, there are a lot more startups and every single one is looking to thrive. To be ahead or stand out, each startup has to put in the work by being creative, innovative, and up to standard. For every time they leap, there is another success to reach; this sometimes brings so much pressure on the startup that they are unable to catch up or adapt easily, leaving them to dangle or take it again, one step at a time.
Finance
A startup needs proper funding to do well, or else it goes off the cliff. Time and time again, funding has been cited to be one of the major challenges faced by startups. According to research, the average amount of money for launching a startup is about $3000 after which the business also raises other funds to keep it running by finding investors, taking loans, or even bootstrapping. It is possible to get funding but the ability to sustain the funds for a long term while the business picks up is one art that not all founders have. And, because of this, they might not be able to continue with the enterprise.
High Employee Turnover
Employees are quick to leave some startups after working for a while but this is not peculiar to all startups. This challenge is usually a result of the startups not having enough resources or being unable to provide the employees with the appropriate benefits and remuneration. And, the moment an organization begins to lack employees, its growth and stability can be affected. Also, the work process will be disrupted which means that the organization cannot remain in the competitive market.
Poor Planning
The idea of owning a startup and becoming a CEO is so thrilling that you forget that so much work must go into planning. Best believe if you get funding, inadequate planning can still cause you to lose the opportunity to build a good project. Startups without a well-thought-out business plan or solid execution salary can encounter problems with their business and this may lead to mismanagement of funds, and in the end, failure to complete the project.
Lack of Product-Market-Fit
A startup may put in so much work, yet the product fails to gain traction. This usually happens when the product
does not exactly meet the needs and preferences of the target audience, therefore it is unable to effectively solve their problems. Getting it right with product-market fit is a big achievement for many startups because this signifies that the product resonates with the customers and has a strong market demand.
There are several circumstances that startups face which may or may not be, in the long run, cause them to fail. However, the ones listed above are very common ones that every starter or founder should look out for early so it doesn’t eat deep into the hard work that has been done.
