Why are start-ups struggling? And how to save them?
Start-ups can experience different crises in their path, due to many reasons, which may relate to the company's owner, management, teams, and others.
Some of these start-ups may fail to survive their struggle, and others may survive it, by pursuing any of the rescue methods, which we will discuss.
Why are startups struggling?
Start-up struggles may be due to many reasons, but some key points cause start-ups failure, but it can avoid them.
Financial mismanagement
Not covering all the financial requirements of the company, the accumulation of debts and payments, or misplaced money, all these points can put the company in trouble.
Not having side capital
Ignoring the idea of having a side capital other than the company's main capital can be a fundamental reason for its struggle. This point helps the company cover its needs in case of any issues by customers, or any emergency issues.
Poor management
The majority of the start-up struggles may lie in their poor management, resulting in a series of issues; such as a lower productivity rate or lower profit rate than expected, also toxic working environment, financial conflicts ..etc.
Unexpected international crisis
The world as a whole may face an international crisis that faces its natural sustainability, such as natural disasters and pandemics, technological changes, and political crises, so a strategy should be developed to deal with such crises to avoid loss or struggle.
How to save start-ups from struggling?
There is more than one way to save any start-up that is struggling during its path, but it depends on management, along with strong belief in the company's idea, and not giving up when facing any challenge.
Because surviving these struggles with minimal losses can increase the probability of future success.
Determine the main reason for the struggle
A meeting of all members of the company's managers, to discuss all the possible reasons for the struggle, and ideas or actions that can be taken to get out safely without losses.
Review all business documents
Performance tracking files and financial records, as well as performance indicators, sales, marketing expectations, and others, should be prepared to be well reviewed, analysed, and evaluated, and suitable action will be taken based on what has been achieved.
Third-party loan request
If the principal source of cash runs out, it is necessary to apply to secure a commercial loan from a bank as an alternative plan, following the preparation of all the required documents and taking all necessary action, also the possibility of not obtaining it, and the preparation of another financial plan (plan B).
Restructuring the company's debts
When confronted with any financial struggle that threatens the start-up with bankruptcy, one of the following measures should be taken:
- Extending the payment terms.
- Setting a lower interest rate.
- Take sufficient guarantees to the company’s payment.
This is because all of these actions can guarantee both parties’ rights, and save the company from bankruptcy and failure.
Developing new marketing strategies
Marketing strategies are endless nowadays, so they should be updated and replaced now and then, as the manager should keep up to date.
Also, focus on reaching the target audience on online platforms, and also competitors should be well studied to be established distinctively and ensure their superiority.
Investing in the workforce
Besides the importance of capital in its well-known form, there is more important capital for the company; which is the team. Through which the company starts, succeeds, and continues, or may struggle and fail.
It is important to choose its members well, focus on the diversity of their experiences, work to develop them, and meet their needs constantly. As well as provide them with the right working environment, invest in their skills, and motivate them to provide the best they can do.