We discuss with experts what problems startups face and what a university graduate should do to avoid them.
Whether you have the idea of developing betting apps for Android and iOS or other entertainment, you will find our tips helpful.
What problems do startups face?
As a rule, new entrepreneurs and recent university graduates make similar mistakes when starting a business project. Again, a lack of knowledge, funds, and experience come into play. Understanding what to be careful with will help you prepare.
No entrepreneurial knowledge
A successful startup is not determined by its organizer’s age (and often experience). It depends more on how ready the person who founded the business is for self-development. Students have little experience, so many things they will have to deal with for the first time: tax, intellectual property patenting, contracting, hiring, and more.
Another problem is the complete lack of understanding of the market. It is especially true for b2b startups. Young entrepreneurs usually think about what would be suitable for the client company. As a result, nobody needs such products, and the company loses money. It would help if you always thought about the end consumer.
You cannot eliminate risks, but you can minimize them. Customer development, for example, will help reduce product risks and understand that you are solving someone else’s problem, not your desire. Likewise, Bootstrapping allows you to reduce financial costs, which means you will lose less money if you fail. But to apply these tools, you have to start understanding them.
Cost overruns
Many people have worked in corporations for a long time, and when they launch their startup, they go down the drain. It is because they are used to doing everything in a big way, and a startup never has a lot of resources.
Incorrectly assembled team
To successfully launch a startup, it is essential to recruit a team capable of making the idea happen. Investors usually give money to those with all competencies closed in their group, where each participant is an independent expert. Accordingly, the team must include someone who will develop the business, manage sales and be responsible for networking, and create the product: an engineer, technologist, or scientist.
The Economics of Education
At the startup stage, there is still no possibility of steady money, and people often work with pure enthusiasm. So it’s expected that someone will leave. People get tired, don’t want to do new tasks, or ask for other conditions. Usually, 70-80% of teams fall apart at this stage. But an entrepreneur understands who you can work with and can’t, leaving 1-2 people who are worth building a business with.
Non-viable ideas.
Entrepreneurs in the b2c segment usually do a poor competitive analysis. They think they have a great idea. But often, it turns out to be a simple one-size-fits-all solution with little difference from the competition: ridesharing, other meal delivery, pet services, and many social projects.
Youth is good – it allows you to get involved with completely crazy solutions, which experienced people will not offer. After all, many cool things lie at the intersection of crazy and rational. But overconfidence in your ideas pushes you to create startups with no market demand and no focus on the actual consumer. As a result, many startups find themselves solving nonexistent problems for nonexistent customers.
Not enough fundamental preparation
An entrepreneur needs general fundamental training. After all, to do a good business project, you have to be familiar with the field in which you work and a large number of related fields. It is possible, of course, to find some templates, examples, and recommendations. But suppose a person does not have a fundamental education, the ability to distinguish false information from substantiated information, or the skill of fact-checking. In that case, he will likely find unverified instructions, make some “Frankenstein” on their basis and fail to notice the little things that will kill his business.
What opportunities a young startup has, and how to avoid problems
There are three main paths college graduates can take with a startup idea. Here are the main advantages and disadvantages of each option.
Trying to launch a startup right away.
The most obvious way for most startups is to start right away. But not everyone succeeds the first time.
- Statistically, such cases account for 10% of the total failures. The main problem is that the education received with a conditional bachelor’s degree is not always enough to launch a business successfully.
- In addition, people aged 18-20 don’t yet fully understand the importance of the knowledge they receive and don’t learn the program as thoroughly.
With this option, the best solution is to hire a competent manager with a business education. Otherwise, scaling a startup is almost impossible without a person who understands business processes and can make informed decisions.”
Investors may worry that you are too young. In such cases attracting a mentor, a well-established professional in the market, will help. Join mentor communities, following offers, and participate in contests. When the right person gives you advice and takes an interest in your project, offer to be a mentor for a share or nothing.
Go to the gas pedal
In a gas pedal, you will meet market experts who will help you evaluate your idea and develop your project. There are free acceleration programs. In addition, there are paid gas pedals.
The gas pedal does not cover the need for theoretical knowledge. And small business entrepreneurs often are not familiar with the fundamental theories, such as project management standards (Project Management Body Of Knowledge) and risk management systems. Yet, without this foundation, running a business won’t be easy.
To study in the master’s program.
A master’s degree program can provide all the theoretical knowledge you need and develop critical thinking. Classical programs usually have university professors who tell you how to do something in theory. Less often, there are invited experts-practitioners who can provide exciting and relevant cases from actual companies.
Programs of a new format that combine theoretical training and gas pedal opportunities are starting to appear.
MVP (short for Minimal Viable Product) is the simplest product prototype that allows you to test an idea and get consumer feedback.
The disadvantage of the master’s program for the aspiring entrepreneur may be that the program lasts two years, not 7-8 months, as an average acceleration program. Not everyone is willing to devote that much time to preparing. Nevertheless, the new format programs allow you to defend your startup as a diploma, which means you can start working on your startup while studying.”
A quality university is a “boiling point” with many people with different opinions, knowledge, and experiences. The more of them around, the more prospects for future business. It’s where all kinds of research feed ideas about what people and the market need. Whoever gets first access to this information has a better chance of using it in business projects.
