Top 10 Challenges Faced by Startup Founders in India

Starting a business has its own challenges, but it can also be like living your dream every day. In 2020, more than 800,000 brilliant ideas began their path as startups or small enterprises in the United States.

So, do all of these startups succeed?

No. Obviously not. In fact, the majority of them might not get through the first year. As fascinating and attractive as the concept of a startup may be, there are many difficulties to overcome. Your business idea is put to the test at each crucial decision-making stage. Ask any successful startup and they would describe their success tale, studded with challenges.

So, What does it take to go from having a great concept to building a brand worth a billion dollars? Just the determination to overcome challenges. Then, what are the difficulties? Read this article to learn about the difficulties startups faces in their initial phase.

Financial Resources

Starting up a business requires capital, but for entrepreneurs who are new to this industry becomes difficult to acquire it. There are various funding sources available such as family members, friends, loans, grants, angel investors, venture capitalists, crowdfunding, etc. The aim to expand the business demands active cash flow from time to time and as the business starts to grow, the need to have capital rises rapidly. In order to have a successful startup, one must have a command of effective cash management. According to a recent survey, 85% of new companies are apparently underfunded, which indicates a possible failure.  

2. Revenue Generation

One of the main reasons behind the failure of many startups is insufficient revenue generation. The focus on the core mission and vision gets diluted as the company grows and expenses rise alongside declining revenues. This leads companies to focus more on fundraising. As a result, producing revenue is crucial, demanding good burn rate management, which is just the pace at which businesses spend money initially. The process of developing and keeping growth is more challenging than finding enough funding.

3. Team Members

It is a crucial step which decides that whether your startup will reach the IPO stage. One must hire a team that understands your vision and mission in order to help you in your startup expansion. One should start by recruiting a team of reliable individuals with complementary skill sets. Having a team of people, where everyone is specialized in their area of work is a bonus for a startup. But not having a strong team can be one of the reasons for startup failure.

4. Strong Support System

In the lifecycle of startups, there are multiple support mechanisms that play an important role in startup success such as incubators, science and technology parks, business development centers, and many more. When these support systems are not available, there are high chances of startup failure.

5.Increasing Market Awareness

We often neglect the market barriers or sometimes unintentionally forget to take a detailed look at the market limitations. This becomes the major cause of startup failure. When you are trying out a new product, the environment for a startup becomes more challenging than for a well-established company. 

6. To Match Customers’ Expectations

Another major challenge is to understand the market’s need for the product, current trends, demand for the product, etc….In order to satisfy the customers’ expectations, one needs to come up with new changes in their product offerings and that demands innovation. If you want to stand up differently from your rivals, you need to be well-versed in your sector. As new technologies are coming continuously, it has become very important to create something that surpasses the previous innovation.  

7. The Founders' Tenacity

Startup founders need to be strong when times are difficult. Setting up a business is difficult, especially during the initial phase. The beginning process is filled with delays, setbacks, and issues that can’t be resolved. In order to pursue their goals, entrepreneurs must be tenacious and should be ready to cope with upcoming situations.

8. Rules and Regulations

One has to go under several government approvals in order to start their own business. Registering an office is difficult, even if you see noticeable improvement during the approval process. India has strict regulations governing labour laws, intellectual property rights, dispute settlement, etc.

9. Lack of Mentorship

Having appropriate guidance during the initial phase of your startup is a must. One of the main issues in the Indian startup environment is a lack of appropriate guidance and mentoring. There are many entrepreneurs out having the best ideas/concept, but the main reason that most startups fail is the lack of mentorship, lack of proper guidance, and lack of market, commercial, or industry knowledge to get their products to customers. It is a well-known fact that a great concept only works when it is immediately put into action. The largest challenge that could put a potentially good idea to rest is a lack of sufficient mentoring or coaching.

10. An Inadequate Branding Strategy

Another problem that prevents startups from thriving more quickly is the lack of an effective branding strategy. According to Hemant Arora, Business Head-Branded Content at Times Network, branding is extremely important since it provides a product with an identity and takes up space in customers' minds.

Conclusion:

Voonik, Bangalore based fashion app raises $20 Million Series B

Voonik, Indian fashion startup based out of Bangalore has raised $20 Million (INR 133 Crores) in Series B funding. The investment round was led by their existing investor, Sequoia Capital with participation from Japan’s Beenos, Singapore’s Beenext, Tancom Investments, Times Internet, Parkwood Bespin, Kunal Shah and Seedfund. Voonik was launched in 2014 by Navaneetha Krishnan and Sujayath Ali. It…