3. TECHNOLOGICAL ENTREPRENEURSHIP
3.7 Most Common challenges faced by software start-ups
cause them to fail in actualizing the vision of its founders. Statements such as “a smooth sea never make the best sailors” and “survival for the fittest” fit well with most tech start-ups. Founders often experience challenges that make entry and establishment into the software industry difficult. Luckily, difficult and impossible are not synonymous with. There are so many examples of start-ups that managed to overcome the barriers of entry into the industry and went forward to joining the giants in the industry. As regards survival for the fittest, the founder must ensure that the start-up has what it takes to sail through the initial phases of business. Common challenges faced by software start-ups include fierce competition, unrealistic expectations, hiring suitable staff, impaired deci-sion making, poor financial management, untrusting customers (Tyler, 2015).
3.7.1 Fierce Competition
It is argued by (Giardino et al., 2014) that tech start-ups face fierce competition from established firms within the industry. It is common place to find giants engaging in fierce competition. Start-ups that come into this hyper competitive environment must ensure that they have a unique value proposition which will in turn assure them of gain-ing competitive advantage and thrive in the competitive business environment.
Early stage start-ups often need to come up with very good differentiation strategy that is sustainable and profitable in long term for the business, one example for this situation could be newly formed resource sharing ideas that have been recently introduced by some transportation companies like car sharing and ride sharing that is a very unique and effective service and pricing model to offer transportation services.
3.7.2 Unrealistic Expectations
The second challenge that start-ups usually face is related to founders some founders have unrealistic expectations which the project to their teams and this places pressure on
the teams to over deliver within a relatively short time. To counter this, founders must subject all expectations to the metric of sustainability. In the event that the expectation is not deemed sustainable, then such an expectation needs to be revised.
In Most common situations the start-ups try to sell the ideas or services and promise deliverables that are not realistic or clients often expect them to deliver a lot within lim-ited amount of resources they have this make it difficult and a major challenge for early stage start-ups coupe the unrealistic expectations in terms of deliverables and perfor-mance.
3.7.3 Building competent teams
The third usual common challenge is that some start-ups fail to hire suitable candidates who can drive the start-up to success. The team hired by the founder must be comprised of sufficiently qualified individuals who can work together within the established struc-tures. Fourth, founders often run into challenges finding partners who share their vision.
Entering into partnerships with such individuals can hinder decision making especially when certain critical decisions need to be made by the partners (Giardino et al., 2014).
Hiring or building competent teams within the start-ups also become a most common challenge because mostly start-ups have limited amount of funding and resources through which they are unable to offer market competitive salaries and perks and finally end up in situation where they need to hire fresh or inexperienced team members which can be a tricky challenge in terms of performance of the company.
3.7.4 Lack of resources and Funds
Poor financial management is also a challenge faced by many start-ups since in the be-ginning, the start-ups are operating with limited funding and resources. Small start-ups may not have the capacity and skills needed to manage the finances of the start-up properly. As the start-up expands, the founder must consider hiring a finance manager who will help in managing the financial resources of the firm. One of the most common fundamentals of a successful company is to have a good management of resources and accounts, which acts as backbone for the businesses so the funds and financial man-agement need to be done or in other words accounts are needed to be handled in timely manner since nearly 50% of the early stage start-ups fail because of poor financial man-agement (Giardino, C. et al., 2014).
Improper or poor management of accounts and financial resources like book keeping, cash flows and sales makes it difficult to forecast the profitability and long term success of the companies, which often misleads the management and company soon run out of funds and financial resources resulting in not able to afford the employees or able topay them for long term, this can result in loosing the trust on employees and soon the
com-panies main operations are effected as well sine hiring and putting new resources to handle the operations is not often the best practice for successful businesses.
Last but yet most important, the lack of trust on the part of customers is yet another challenge that start-ups have to deal with. Most customers readily trust established busi-nesses. Start-ups can gain the trust of these customers by ensuring that they structure their operations with the customer in mind. Being customer-centric will attract and re-tain customers to the start-up (Tyler, 2015).