Issues Affecting Startup Management

Managing a startup is a different ball game from having a management role in a large corporation. As someone who has been both an integral part of a large corporation and the CEO of many startups, I know this firsthand! The challenges are entirely different, depending on the stage the company is in. Startup managers should understand the difficulties of managing and growing a startup to avoid falling into the same pitfalls as other entrepreneurs before them.

Fundraising takes time and effort

With very few exceptions, most startups are short in cash – self-funded companies are even less liquid. Every startup needs to make the most of its initial seed funding to reach all milestones they need to raise more funds in the next round. Budgeting and prioritizing expenses are, therefore, paramount for survival.

Startups should also make sure they allocate enough time and resources to fundraising. It's common among entrepreneurs to underestimate the time and effort it takes to raise another equity round. Finding investors, pitching, going through due diligence, and meeting all the legal requirements can easily take 3-4 months. It's important to start fundraising early to ensure the company has enough runway to survive until the next round is closed.

Startup life requires constant learning

In a big corporation, employees are highly specialized and take care of a tiny aspect of the business. Every employee is only a small piece in one big machine.

In a startup, however, everyone has to wear several hats at the same time. The founder might be the CEO, business developer, and accountant at the same time. The person running sales might also have to run the marketing and PR departments. The smaller the company, the more each employee acts as a generalist.

That also means people need to perform tasks that they have never learned and never received any training. Such work requires constant learning and the willingness to acquire new skills when needed.

Hiring qualified staff is more challenging

The team is the most critical success factor in every business. Startups often have neither a fancy name nor deep pockets, making it harder to recruit the superstar employees who make a winning team.

One way to get qualified staff is to recruit trusted people in the existing team's networks and give them equity stakes and a cash salary. That also ties employees closer to the business and provides extra motivation to lead the company to success.

Scaling sales and establishing processes

As companies grow, they need to put processes and procedures that enable fast and long-term growth. The founders who used to do everything by themselves now have to delegate more and more tasks to the second-layer management. Senior managers need to build up their teams and establish processes that work smoothly once they grow bigger.

The most critical component of this scaling process should always be sales. Many startups are so focused on passionately building the best products, that they don't put enough effort to sell them. However, the harsh reality is that the bottom line is what counts at the end of the day.

Sweet Tips from Ally

1. Take the time and effort to fundraise properly
2. Strive to consistently grow and learn new things
3. Find the best people for the job
4. Make scalability your top goal