Sunday, 9 January 2022

Challenges faced by start up businesses and entrepreneurship

 The contribution of small start-ups for development process of country is very vital. Small scale start up industries and enterprises are important  in terms of employment, production, use of local raw material and indigenous skill. In any country, small scale business share sizable proportion of corporate. Every day bulk of new start-ups is open in world wide. But the question is how much start-ups survives in very day challenges. There are huge challenges like effective use of modern technology, changes in production process, uncertainty demand and many more. In this article, we are listing the major challenges faced by start-ups.

Lack of finance

One of the major problems faced by small start-ups is that non- availability of proper finance to carry out the daily operations. Generally a small business started with small capital. Then, they take credit from capital market. This is how the small start up enterprises are heavily dependent on the on the local finance resources. This makes the small and beginner business owners to became the victims of exploitations by high interest borrowers.

On the other hand, bank also hesitate in loaning the small and new start up companies.  The lack of capital and financial resources results in making the start up company to suffer majorly from deficits.

Raw material

Another major problem that a small start up company face is the non- availability or the lack of information regarding the adequate raw material. Since in the beginning, the demand of the final product is low, thus the company cannot buy the raw material in bulk. This results the company to pay the high price for the raw material.

Also, the small start up companies are having less facilities for the storage and warehouses, thus they are forced to buy raw material in small quantity only and consequently high price for the same.

Affordable employees

As the small start up company is already running out of the capital, they do not afford to invest in high payout talents. The start up company in the beginning need to compromise in less skilled and experienced but affordable employees. This is also the reason that impacts the productivity of the business. Since the company can pay only low numeration, they need to compromise with the low trained or no trained employees and invest their time in training them.


Every company needs to have a good marketing strategy in order for generating revenue. For effective marketing, the company first need to understand the consumer demand and requirement. And, then they should develop the strategy according.

But in most of the start up cases, enterprises do not emphasize on marketing. Or they follow less accurate strategy. This leads the company to take more time for making progress or sometimes in lack of proper strategy, the company end up wrapped.

Quality compromise

Since the start up companies are having major financial issues, they tends for cost cutting. And, this is right up to some extent but not unless the quality of the product is compromised.

The enterprises should focus on cutting their cost down but should make sure not to compromise with the products. But, most of the start up companies with less managerial experiences cut down the manufacturing costs leading to poor quality products making them does not achieve the desired standards. Without adequate investment resources start-ups cannot match the standard quality.

Also, they do not have fund for upgrading technology which further deteriorates the quality of the product. Compromise in the product quality is weaker point for any business while competing in global market.

Lack of capacity utilisation

Inefficiency of the business operations results in high operational cost and can lead to major losses to the start up company. Since most of the start up company owners are not having any managerial experiences, they often end up with high cost operational processes and unable to efficiently utilize their capital fund. The lack of expertise and high losses gradually results in wrapping up of the company.

Use of outdated technology

In today’s time, technology plays a vital role in success of any business. Every day technology updates and business needs to update with the technology. But for the start up companies, it is quite difficult to update their technology with time. And, when the business uses the outdated technology, it can be reason for low production and failure of small business.

Ferocious competition,

In present time, the concept of liberalisation, privatisation, and globalisation policies has been followed by several countries in all over world. In this situation small start-ups feel threat from global competition. Start up companies not only faces competition from medium and large industry, but also from multinational companies. In such cut throat competition, it is quite difficult for the start up enterprise to stand and survive with well quality standards, skills in technology, worthiness in finance, and marketing capabilities.

Less labour

Another challenge that small start up companies faces are the lack of adequate and affordable labour. Many times, the company in lack of labour fails the optimal production and thus fail to survive in the competitive market.

Less online presence

Many small start up companies are unaware of the social media marketing strategies and thus do not invest in making the online presence of their new enterprise. This leads to company to lag behind in the competitive world and unable to survive or stand well in the competitive market.   

The Bottom line

So these are some major challenges faced by the small start up enterprises! I hope this article help the small start up entrepreneurs to acknowledge the major challenges in the start up business and develop strategy accordingly. 



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