How to Overcome Startup Growth Challenges in 2022
With more than 1 million startups launching at the start of this year in the USA alone, and with over 4.5 new million businesses taking form in the US economy since 2020, it won’t be an overrated statement to say that the time to be a business owner or rather a startup owner has never been better. The pandemic has no doubt suppressed certain opportunities but on the other hand, it has given birth to a startup ecosystem like never seen before. The opportunities might be wide open but of course, they are still obstacles to business that exist along with certain challenges for startups especially relevant to their growth and survival.
Challenges in any business are part and parcel of the game. But what one needs to realize is that these challenges, especially when they are relevant to a startup’s initial growth and survival, need to be tackled head-on. Certain challenges, especially those that hinder you from entering your target market or developing a steady revenue stream, or even ensuring that your employees are satisfied, are crucial to any startup or business’ success. But what is important is to understand how challenges are opportunities for growth. Once these business growth challenges are resolved with a proactive approach and business acumen, the opportunities are endless.
Growth Challenges a Startup Can Face in 2022
We will now look at some challenges in relevance to tech businesses and startups. Based on research these challenges are the most expected challenges in terms of growth that a startup can face in 2022. We will also explore possible solutions to these challenges, to offer you a better insight into how the startup ecosystem is now evolving with this solution-based mindset.
This may seem like an obvious business challenge but as a startup owner, it should be part of your daily objective. Experts predict given how quickly the industry is evolving and competition is increasing with new entrants, acquiring customers will become one of the top challenges. This challenge is not only detrimental to your growth but initial survival as well. Because if you’re not able to develop your customer base, it reflects poorly on your value proposition, product-market fit, and even your marketing team. It might also make you question your initial business idea in the first place, whether there is a need for your business to exist or not. Therefore, this growth challenge needs to be resolved with a hands-on approach.
Solution: To solve this challenge first and foremost you should develop a strong, content-focused demand generation strategy. Without a demand generation strategy, you will not only be unable to generate leads but of course, convert those leads into possible customers and clients as well. Your demand generation strategy should align well with your company’s value proposition and business model as well as the market’s needs. You can also bring on board relevant consultants and third-party strategy developers to help you in building your custom-designed demand strategy. This move will of course help you enter the market more convincingly and attract customers within your target segment.
Supply Chain Challenges
Even with the pandemic, one expects a boom in the IT industry owing to the remote mode that is being adopted throughout the world. But unfortunately, with increased demand comes increased pressure on IT vendors. IT solution providers and vendors must tackle the challenges when it comes to supply chain management and transportation of equipment in the pandemic. If you are a tech-based startup operating in the IT sector, then of course the supply chain issue is also relevant to you from the supply end of things rather than demand. Either way, this must be tackled proactively otherwise your startup might suffer and be unable to achieve its growth targets.
Solution: If you are facing this issue from a buyer’s perspective, then you should invest in planning and scheduling. As a startup business owner, you should be able to project your IT and software needs at least for the next fiscal year. Using this information, you can then develop a prophylactic strategy in which your procurement is done relatively ahead of the demand schedule. On the other hand, if you are an IT-focused startup, you need to develop projections based on market insights for sales and customer demand. Using these projections, you also need to be prepared in advance by procuring the required hardware and software before the customer places their order.
In 2021 and now continuing in 2022, industries all over the world have experienced new workflows and of course, have developed different mechanisms for their management. The majority of these workflows have come in the form of technological advancements rather than needs due to the pandemic as well as to ensure survival and growth during times of lockdown. As a startup business owner, technological workflow is not only an obstacle in business because it requires heavy financial investment to overcome but also threatens the growth opportunities that you want to exploit in relevance to your target segment.
Solution: As a startup, we do understand that overcoming this challenge might be difficult due to the limitation of funds. Therefore, we recommend that you invest in virtual solutions and use the help of licensing and leasing rather than purchasing and owning. This must be done no matter what because for you to stay afloat in these challenging times and ensure survival and growth, you need to be in sync with the industry. To manage this technological workflow, you also need to ensure appropriate training of your employees. This will ensure that the virtual solutions that you are deploying are used to their maximum potential and produce tangible results that help you in meeting your vision.
Work-Life Balance for Employees
For you to succeed and grow as a start-up in this cut-throat environment, you need to be able to depend on your team. There is so much that you can do as a business owner. Therefore, you need to trust your teammates and colleagues for critical work decisions and contributions. With the work from home concept becoming a norm throughout the world, the lines between work and home have blurred. The brick-and-mortar model of work or office helped create a distinction between the two.
But now as more and more employees are working from home due to the pandemic or even due to flexible options being provided to them, a work-life balance challenge has emerged. Employees are feeling constantly exhausted as now there is no distinct office time and due to the nature of the startup industry they are even required to work and deliver on weekends. With this kind of mental stress and discomfort surrounding the employees, you cannot expect them to give their 100% in helping you grow and prosper as a startup.
Solution: As a startup, you need to take on this business challenge from a human resource point of view. We do understand the financial limitations that are placed on startups usually, but you need to find cost-effective ways to invest in your employees. Focus on employee health and wellness initiatives especially those involving mental wellbeing and growth. Also, ensure to draw distinct lines between working hours for all categories of employees. This will help them to rejuvenate themselves to deliver their 100% for the growth and success of your business.
In these uncertain times and increased competition securing funding and managing the relevant risk is one of the biggest growth challenges that you can face as a startup. The pandemic has not only reduced funding avenues but has also added to additional concerns of investors. Therefore, the challenge that you would be facing head-on as a startup business owner would be how to manage exposure risk for the investment that you have already secured or is in the pipeline of being invested.
Solution: The easiest solution to managing risk is ensuring that you meet your growth targets. If you meet the projected growth targets that you have set for yourself then your investors will be satisfied. Not only that all the different stakeholders involved will of course see the potential in your idea and with tangible convincing and perceptible financial projections, but you will also be able to secure more funding to finance the growth initiatives. Therefore, when developing the KPIs and objectives that you want to achieve and before putting them in front of your board of investors, do ensure that they’re not only achievable but there’s also a cushion for unforeseen circumstances.
Till now we were focusing on customer acquisition but another challenge that you will be facing in 2022 as a startup is that of customer retention. Industry research has proven that the cost of customer acquisition is of course more than the cost of customer retention. Therefore, in these diverse times where new ideas and businesses are entering the market every day, developing a loyal customer base is not only important but is rather imperative to your growth and survival in the industry.
Solution: To increase your customer retention and decrease your churn rate, you need to focus on customer relationship management. Use meaningful and content-focused customer development strategies to cater to your target market’s needs with your value proposition. There might come a time where you would be needing to fight on the grounds of price wars and costing but ensure that during these wars you do not damage your revenue stream or go into loss. A strong customer retention strategy will help you in the future as well where these customers will become strong candidates for upselling and would also increase your brand awareness with their word of mouth.
What is the one thing that cannot be replicated or copied by your competitors? Of course, your distinct competitive advantage. But what you need to realize is that for a startup the biggest competitive advantage that you will ever have will be that of your team and its members. Attracting the best and most skilled workforce is not only a business challenge for 2022 but also for the times coming ahead. As a startup, you might be limited in this arena because of the compensation packages you can offer with the new financial limitations. But this should not deter you from still giving your best in meeting this challenge.
Solution: To meet this challenge you need to ensure that the individuals that you want to bring on board as a part of your team, should share a similar vision regarding your business as yourself. This alignment of thoughts and end goals is compulsory for your business to grow and succeed. Secondly, if you cannot meet their demands in terms of compensation packages, always highlight the growth opportunities they will be able to enjoy in your startup. Also offer certain ownership and investment opportunities, if possible, on achievement of breakthroughs. This will not only help them in deciding whether they want to become a part of a startup or not but in case they decide to do so, a sense of ownership will also prevail.
As a startup in the year 2022, you will not only face the challenges that we have mentioned but of course, you will also come face to face with some unforeseen circumstances. But with the right approach and a focused mindset, you can use the tools and techniques that we have mentioned here and apply them in other real-life scenarios as well, with relevant flexibility. Always remember that growth challenges are part of the journey to success. If handled correctly and admirably, these challenges will transform themselves into opportunities like never seen before.