5 Big Problems to Look Out for in Your Startup’s First 3 Years


Starting a business is exciting — and fraught with challenges. Many of them are fairly common, however, and knowing what you’re up against will help nurture your startup through those heady early years.

“There are a lot of things that can be overcome with drive,” says Joshua Loeske, CEO at Quality Sitework Materials and an accelerator coach at the Entrepreneurs’ Organization advisory network. “Business is not a straight line from the bottom to the top; we all go through peaks and valleys.”

Here are five big problems to look out for in your startup’s first three years.

Cash Issues

Money management is vital to small-business success, but entrepreneurs often fail to do it correctly, Loeske says. “Small businesses don’t estimate the appropriate runway for takeoff,” he says. “If you haven’t appropriated the proper amount of cash, you end up losing really quickly.”

Early success doesn’t protect against cash issues either, he says. “A lot of small-business owners try to bootstrap, and that’s a viable method to start,” he says. Working with what you have doesn’t allow for rapid growth, however, and cash can become an issue very quickly if your company hits it big early on. Work with someone who can help you forecast your financials to avoid these problems.

Personnel Challenges

Loeske cites Michael Gerber’s idea from “The E-Myth” that people who start businesses tend to start in one of three roles: as the technician, the manager or the entrepreneur. “The majority of small businesses I’ve worked with, the owner starts it because they’re a technician,” he says. “They understand the product and what’s needed in the market, but the concept of how the business works is lacking. They don’t understand strategy or execution or the need for cash.”

When that issue is combined with an ignorance of how to hire effectively and a reluctance to delegate, these owners of new businesses often struggle to put the right people in the right positions or to give them the tools to do their jobs. Loeske says it’s vital to identify who’s responsible for operations, sales, market understanding, IT and financial aspects of the company. In many startups it’s the owner, but you need to have help.

Lack of Strategy

Having the right people in the right roles will help you set a strategy — and without a strategy, Loeske says, your business won’t go anywhere. “It’s overlooked way too often,” he says. “Most people don’t want to look down the road, and they don’t want to reflect on what has or hasn’t gone well.”

You need short-, middle- and long-term plans to serve as a road map for your business, Loeske says, suggesting plotting things out on a scale as short as a month or two from now and as long as five or 10 years. If you don’t see yourself as a strategic planner, ask for advice. “Just because you’re the founder doesn’t mean you’re the visionary,” Loeske says. You can always bring in a board, an advisory group or a CEO to help with strategy.

Lack of Execution

Execution can become a challenge as you clarify your strategy and get people in the right roles, Loeske says. You need processes and people to fulfill your strategy, and if people aren’t held accountable, things just won’t get done. Loeske encourages small-business owners to change things up if it looks like there’s a holdup in any of your systems.

“You learn along the way what works and what doesn’t, and you modify your process to accomplish your end goal,” he says. “When there’s a bottleneck, don’t be fearful. Pivot and make a change. If it works, document it.”

Fear of Asking for Help

Entrepreneurs worry a lot about failing, but Loeske says many successful entrepreneurs have failed several times to get where they are now. “As long as you learn from failures and don’t repeat them, it’s not a total loss,” he says.

Through it all, don’t hesitate to ask for ideas or assistance. “Entrepreneurs tend to think the whole world is on their shoulders, but a lot of times it’s just ego in the way,” he says. “If you let people know what you need you’ll find the answers you need. But you’ve got to ask.”

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