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5 Common Problems Faced by Startups and How to Avoid Them


Every startup is as unique as its founders and their vision. Some problems, though, crop up so often that all founders, no matter who they are or what the focus of their companies, should be prepared to deal with them, or better yet, prevent them from arising in the first place. The most common problems usually involve conflicts between people. Other problems arise from lack of foresight, from rushing ahead without thinking things through.

1. Role confusion

In a startup's early stages, founders typically ride a wave of enthusiasm, expecting to iron out the details later. One area that should never be left to chance is deciding which founder performs which functions within the company. Otherwise, you will be dealing with pure chaos, with tasks that no one thinks of doing left by the wayside.

2. Family feuds

Many entrepreneurs dream of starting a company with their friends or family members. On the surface, that might seem like a good way to ensure that cofounders are compatible and will enjoy working together. The reality is different. Startup teams that contain people with social ties are the least stable teams, according to Harvard Business School professor Noam Wasserman, author of “The Founder's Dilemmas.” Not only can personal problems between cofounders carry over into the business realm, but creating new business relationships can destroy the pre-existing personal ones. Proceed with extreme caution.

3. Listening too much to your gut

While many business people have wisely started paying more attention to their intuition, beware of doing too much of a good thing. Gut feelings should be reality-checked with logic and clear thinking.

4. Holes in the pocket

Cash flow problems send many startups to premature and unnecessary graves. Sufficient planning is the key to avoid that fate. Always know how much cash you have available now and how much you project you will have six months from now.

5. That's nice, but ….

Be careful about pursuing ideas merely because they are interesting or they involve a new use of a current exciting technology. Novelty alone is not enough of a reason to start a company. To be successful, you have to create a product or service that people actually need, something that solves a real problem.

The ubiquitousness of these problems is actually good news for new startup founders. You have the opportunity to learn from other people's mistakes. Founders, by nature, tend to be optimists, but becoming more aware of possible problems on the road ahead is the best way to prevent them.