Starting a business can seem like a daunting move, especially with stats out there that claim about half of all startups fail during the first five years.
That of course didn’t stop Pedro David Espinoza, who by 19 years old was already the CEO of his own venture, SmileyGo. But as he can tell you, the journey isn’t a simple one. No matter what kind of business you plan to get into, there are common obstacles to overcome when it comes to getting one off the ground, even if you’re an expert in the industry.
It starts with an idea: in the case of Pedro David Espinoza, he believes in giving back and making smart investments, so it makes sense that his venture connects companies and nonprofits – an idea that took off quickly. But having an idea is just that – there has to be the right mix of ingredients for it to fly.
Just Starting Is The First Big Step
Analyzing your business idea for too long and being crippled by doubt is also not productive. In many cases, it makes sense just to jump in and navigate some of the early snags that will inevitable pop up in the early going, notes Pedro David Espinoza. That beats the alternative; ruminating about an idea that may never come to fruition.
Obviously, choosing something in your skillset that you’re passionate about will help motivate you to take your startup to the next level. But you won’t know how successful you can be at it until you test the waters, and those first steps can be shaky as you figure out what’s working and what’s not, says Pedro David Espinoza.
If you’re launching a business with partners, then you’ll want to make sure you’re all on the same page and have a partnership agreement in place to ensure there’s no confusion down the road as the venture grows.
Not all startups are selling something unique – and they don’t have to in order to be successful. It can be the way that you sell that separates you from your competition. However, if you’ve designed a new and innovative product, then you may want to consider applying for a patent fairly early in the process. This will ensure that another entrepreneur doesn’t copy the idea (without your consent) and start undercutting you.
You May Need To Change Direction
Pivoting is the act of changing direction after you’re already started creating something (particularly in the tech industry.) This can be especially challenging for startups that aren’t particularly flexible and that haven’t thought about the need for adjustments in their business model.
One well-known example of a new business that pivoted early on (and is now worth an estimated $100 billion on its own as of 2018) is Instagram. Back then, it wasn’t called Instagram; it was known as Burbn, which was modeled after check-in app Foursquare. However, by tracking analytics, the initial team realized that the photo-sharing features of the app were the most popular. So a new direction was taken, and the rest is history.
While the high-profile Instagram example is one that has been referenced on television shows, it doesn’t have to be to that scale. The basic premise, says Pedro David Espinoza, is that whether tech-focused or not, you have to be willing to meet your customer demands. That might mean scrapping existing plans even if you thought they were a sure winner.
Don’t Expect To See A Profit Right Away
If you focus on how much cash you can make from your venture, it might get in the way of what you set out to achieve in the first place, says Pedro David Espinoza. The amount of time it takes to start pulling a profit from a startup can vary depending on the nature of the business, but it’s generally accepted that you won’t be in the black for up to three years. That doesn’t mean you can’t pay yourself before that happens, so don’t panic.
During the initial months and years of a startup it’s important to develop new products and selling strategies, and a big part of that is breaking through the noise by investing in advertising.
Of course, you’ll want to have a budget in mind and keep track of expenses to know where you can better use your resources, he adds. Blindly throwing money around at the beginning of a venture can choke cash flow and spell the end of it in a hurry.
Finally, remember that there are organizations out there that give grants or loans to help keep you afloat while you develop – and don’t be afraid to seek out angel investors like Pedro David Espinoza to get a boost of funding to help your dream business become a reality.