Practical Solutions to the Top 5 Challenges for Founders in 2023 Here are the most common challenges for founders in 2023 and practical solutions for each
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The past decade ushered in technological advancements that have beguiled us. Some have successfully offered solutions to the problems they posed to solve for the common human. Others have taken more from the public than they offered. However, none of these advancements have made running a business any less risky.
As we ease into the year, founders will likely experience challenges on multiple fronts. While there are several technological solutions available to help solve these challenges, it is quite daunting to figure out the most effective solution. Also, having to deal with multiple issues at a time, keeping it together may be a tad difficult.
Throughout the year, I see the following common challenges among founders, and I offered the following practical solutions to help ease their transition through 2023 and beyond.
Related: How This Founder Overcame Challenges He Never Saw Coming
1. Cash flow and funding troubles
Cash flow is the lifeblood of a business, and many fail when they are unable to maintain it. Also, most startups take a while to start generating cash flow. So, they have to find a way to float the expenses before the money starts flowing in. This is why many early-stage businesses seek out investor funding. However, it may not be the best direction to go.
Founders often have cash savings when they set up their venture. It's normal to plan around this cash savings, and they often overestimate the chances of the business turning a profit in no time. As a result, founders (first-time founders, especially) are very likely to incur high overhead costs and accommodate more payroll expenses than necessary. As reality sets in, they may start seeking out external funding.
While it's a popular practice to secure investor funding, it's something you should think through. Founders often make the mistake of giving out too much equity to investors in their bid to close funding fast. Early-stage investors can sense your desperation for money and exploit it to demand ridiculous equity.
To avoid this, you should keep your overhead costs low and reduce your payroll expenses to a minimum. Only hire talents when needed. If a role opens up, and you don't see it being relevant in a few months, it'd be smarter to work with an independent contractor.
As an alternative to investor funding, consider reaching out to a local bank for a business line of credit early enough. This will give you some level of liquidity to keep your venture afloat. Mind you, financial institutions don't really provide a long line of credit, especially to startups. So, the lower your overhead and operational costs, the more useful a line of credit will be for you.
Marketing, as we know it, is crucial to the success of a business, but it's often capital-intensive. A majority of startups are spending up to $15,000 per month on marketing. If you're a startup founder, your mouth is probably agape about how much money other startups are pouring into marketing.
Well, more marketing spend doesn't always guarantee high returns. Almost every startup is strapped for money. So, your ability to find clever workarounds will be immensely helpful.
Instead of creating expensive marketing campaigns, you should consider guerrilla marketing approaches. They often cost next to nothing to create and can be insanely effective.
Also, maintaining a consistent, high-quality blog can help you attract more organic traffic to your website. If done right, this traffic can be converted to hot leads. There is lots of marketing that you can do on a very tight budget. Just get creative.
Related: No Money? No Problem. 30 Low-Budget Marketing Ideas for Your Business
A lot of founders are against complete transparency in their dealings. However, you need transparency to build a successful company. It doesn't matter whether you raised investor funding or not.
With investors, there have been cases where bad investors have used complete transparency against founders in subsequent rounds. On the flip side, non-transparent startup founders are likely to arouse suspicion.
With popular cases, like Elizabeth Holmes (Theranos) and Sam Bankman-Fried (FTX), investors have become more watchful of opaque founders. This can often cause them to demand significant control over your business. Adopting a culture of transparency can facilitate their due diligence and enable trust.
Speaking of trust, a study by the HBR revealed that founders are more likely to attract top talents if they build a more transparent workplace culture. So, why not consider laying your activities bare and maintaining all-hands meetings that encourage collaboration and foster belongingness?
4. Burnout epidemic
When you're building a startup, you can easily find yourself working unusually long hours. Most startup founders work about 80 hours per week. The body needs some rest, food, sleep and distraction to function properly. Sadly, most founders are not giving their bodies enough of these.
The interesting reality is that this unhealthy behavior rubs off on employees. When employees see their leader working long hours, they are challenged to do more. Soon, this unhealthy behavior becomes a culture in the workplace, and productivity may take a nosedive.
Alternatively, you set out designated work hours for yourself and the team. Ensure that everyone on the team gets adequate rest. Also, you should prioritize your health. A simple solution is to leave your computer at work and keep work inaccessible outside work hours. This way, you can get some time to rest and find balance.
Related: 3 Ways to Stop Founder Burnout In Its Tracks
5. Diversity and inclusion
There have been fewer movements better than the need to have a diverse and inclusive workforce, especially from the onset. However, many startups are making this an obsession. Leave the DEI initiatives for established organizations. Instead, focus more on hiring objectively.
As a startup, you need talents for the value they bring to the team regardless of their race, culture, or gender. Don't get bogged in the need to be inclusive that you start losing valuable talents in the process. If you hire on merit and find your team becoming diverse, great. Otherwise, leave the DEI initiative until further down the road.