Technology is probably one of the fastest growing industries in the world. As the use and importance of technology keeps growing in the lives of people throughout the world, the industry seems to be showing no signs of slowing down anytime soon.
Such a surprisingly high pace of growth is attracting new and budding entrepreneurs throughout the world, helping them follow their dream of starting their own company.
However, although things look pretty bright at the surface of the technology industry, there are many challenges too. Usually, entrepreneurs have little to no idea about what they are going to face when they step foot in the industry.
This is also the reason that many new startups fail, as they are unaware of the major challenges, and hence fall pretty to them soon.
However, in this article, we will be taking a detailed look at some of the major challenges faced by tech startups, and also providing a little overview, backed up by industry experts, to help you tackle them.
Competition has just gone through the roof over the past few years in the technology industry. The reason is that it’s incredibly easy to start a tech startup and even raise enough capital for running it. Furthermore, as there are so many startups competing in the same markets, it simply leads to even more competition among the startups too. What this means is that for one particular startup to take off the ground, it will need many others to fail. This obviously turns out to be disastrous.
However, a seemingly great way of getting around this problem is targeting the smaller niche markets. This way, you have a niche you can easily dominate, without having to worry about facing fierce competition.
Furthermore, it wouldn’t take many resources to turn into a leader in such a niche. Keeping up with the required amount of resources is always a challenge for startups, so this is a great advantage too.
Also, customers too, usually never hesitate much to try out new services and untested technologies. They are obviously also interested in better solutions, and as technology is an industry that always promotes new ideas and innovation, customers welcome such moves. On top of it, switching costs tends to be considerably low too for customers in the tech industry, so there hardly seem to be any downsides to this approach.
#2 Growth that’s difficult to keep up with
We know it sounds rather strange, but rapid growth is indeed a problem for many startups in the tech industry. Now though it’s always a great thing for a startup to grow quickly, given its limited resources, there’s only so much it can handle. For instance, if the demand rises two hundred percent over a span of just three months, while the current resources at hand allow meeting only around 50 percent more demand, the startup is going to end up in a troubled state.
An ideal approach to tackle this challenge is to plan things out well beforehand. This is especially true if your startup is based in a smaller niche market. Such markets tend to be very conducive for such unexpected level of growth, and hence you should always have an idea about how could you go forward when the demand goes through the roof in a surprisingly shot span of time.
Things such as talking to venture capitalists and other investors beforehand to make them invest when your business approaches such a phase of growth, planning out how you would go about hiring new talent that would be required immediately when your sales skyrocket, and so on.
#3 Finding the right team
This is actually a challenge linked to the one mentioned above. The reason an unexpectedly high level of growth may lead to a lot of problems is because you may not have the required workforce to keep up with it. Furthermore, hiring talented employees in such a short span of time is incredibly challenging.
Hence, as a startup, you may need to be always on the lookout for great talent, even when you don’t really need them. If you just have all the information you need about them handy, you can always fast-track the hiring process to get through such challenging periods.
#4 An industry that is constantly changing
The technology industry is arguable the fastest growing one in the world. Due to it being so very fast-paced, things keep changing surprisingly soon. Needless to say, it can get quite challenging to adapt to these changes as they come, and this is where many startups give in to the problems.
After all, it may not always be possible for a startup to keep changing its approach to address the changing business environment, especially if they aren’t flexible enough. However, if they aren’t actually flexible enough, it’s definitely a major flaw they may be moving ahead with.
After all, a tech startup needs to be as flexible as it can be, simply because there are so many uncertainties, even if the owner tries to have accurate estimates for almost everything.
A well known name in the industry is of the opinion that tech startups, and even growing tech companies, need to anticipate what the next major changes will be, and change their approach accordingly. This will allow them to create solutions that will help them gain new clients as soon as the business changes according to what they had anticipated. This is also probably one of the most proven ways to succeed.
However, it needs to be kept in mind that anticipating right is just half the job. The other, and probably more important part, is to come up with products that delivers great value in the changed environment.
This will probably ensure that you are one of the first ones to offer solutions to meet the changed needs of potential customers, which will obviously attract a lot of new clients and take the demand through the roof.
However, a downside to this approach is that a startup may get distracted from its initial concept, and the main business idea. This may actually lead to disastrous results over time, as when a business, especially a startup, gets distracted from its initial concept, it doesn’t take it to get lost in the market.
Hence, although innovation is important, it shouldn’t come at the cost of the basic goals of your business. Cadogan, a well known name in the tech industry, offers a great piece of advice to businesses saying that they need to be “ultra” focused on their core values.
A final word
While starting a tech business may be exciting and potentially rewarding, there are many major challenges that are often overlooked by startups. In order for a startup to succeed and grow into an emerging and then an established business, it needs to be well prepared for such challenges beforehand, and have a solid plan to rely on.
In fact, we think new entrepreneurs can take inspiration from Anand Mishra, CEO of Starinfranet, a relatively new but quite successful tech entrepreneur, as he seems to have had an impressive run himself after starting in the digital space.