CEO Challenges: A Comprehensive View Of The Business Issues
Today, CEO challenges don’t raise a lot of eyebrows. Like any business owner, startup founders face the entrepreneur’s challenges that deal with resources, business plans, go-to-market strategy, a CEO dilemma, and to be or not be a co-founder.
What does that really mean, though, for you as a startup founder? Let’s have a closer look at CEO challenges and their impact on business running.
Life as a Startup Founder
Quite often the life of the startup CEO is seen as a romantic one. The problems of entrepreneurship stay behind the scenes. The smashing success of Sergey Brin, Elon Musk, or Mark Zuckerberg inspires us. Sometimes, even too much.
That's why it makes sense to dig around a bit. So you'll see that this position has no definite description and covers a lot of aspects. What gives it a disorienting and even challenging style of far more than 8+ work hours/day.
But if we move aside the elusive easiness of success. And then look closer at the startup CEO, we'll see that this role has a balance in its heart. These are
- work-life balance which often makes startup founders neglect the personal life and give all the time and attention to the company. At least, in the first three years.
- strategy-operating balance is a tricky one. The strategic goals focus on doing things differently in a long-term timeframe and profitability. But, operating goals stress doing things better in the short term for short-term profitability. The first part is the top management, and the second part is for line management.
- leadership-communication balance requires the CEO to be aware of where the employees are and whether they are on the same page.
The point is the startup founder combines several positions during the early stages of development.
What Are the Roles and Responsibilities of a Startup Founder?
Startup founders are the most passionate about their company and product. Being a startup founder, you believe in the core idea and are ready to invest your time and money to make it up and running. That motivates your team - here's where you take on a leadership hat.
What kind of other hats should you as a founder of a company take on? And what actually a modern CEO does on a daily basis? Let's enlist the relevant roles and assignments:
- You should be a product manager to set off your business. Once you have the business idea, you work out a business plan and product roadmap. You are also emulating the technical, marketing, and sales tactics.
- The technical role implies that you get a deep understanding of your product. Without missing a beat, you collaborate with the product manager and development team. Be ready to adjust your product outline and shoot the decisions under time pressure.
- Taking on a product marketer role, you do market research and learn from your competition. So once you have a clear, concise idea, you can make your product stand out.
- After you poked around for insights, it's time for a sales manager role. How are you going to adopt your business concept? Consider what messages, voice and tone you will use for communicating with the customers.
- Another interesting role to play is a customer success manager. Here is where you take a touch of skepticism to your product. And show more empathy for your customers. That is a win-win position that brings you an outside perspective and feedback.
- Quite often, founders take on the Chief Executive Officer role. If you want to become a CEO-founder, you will be the face and the voice of your company. The responsibility for business success and team efficiency falls on your shoulders. Without undue complexity, you are going to develop strategies, manage human and financial resources, and create a company culture.
To ensure the evolving from a startup to a profitable business, consider calling in the experts and hire an experienced CEO.
What Are the Main Responsibilities of a CEO?
The key takeaway for a company of any size or stripe, the basic founder's responsibilities inevitably longing for:
- Develop and update the business plan. You can hire a person to handle it. Either way, you should supervise it.
- Finances are another poignant moment that you should care about. To avoid running out of cash, you need to keep track of how much money is spent and what amount you need to fundraise.
- Communicating with shareholders, the government, and the public on behalf of your company.
- Develop and execute the strategy (that has a twofold nature: long-term and short-term.)
- Work out the brand vision and mission and adjust them to the product roadmap.
- Hire the best-qualified employees and evaluate their performance.
- Keep the pulse on the market changes and industry development, catch the opportunities for growth, and the like.
- Assessing risks, as well as monitoring and reducing them.
- Setting measurable and achievable strategic goals.
In short, CEO responsibilities look like this:
Source: The Balance Careers
5 CEO Challenges and How to Avoid These Pitfalls
This might be a good time to ask: What are the biggest challenges to starting a business? Generally, the top list of shared founder and/or CEO concerns are
Problem: Cash flow is equally important for a startup and a small business. And nearly every founder or entrepreneur finds that the budget limits the full potential of the organization.
How to fix: In some respects, every founder struggles with the budget when it comes to distributing money. Look at the expenses prioritization via the product roadmap lens. It will help to see the spots where to spend is urgent, and where you can cut down a bit. But if the operational or marketing budget will give an expected return, don't reduce them.
Another tip for monitoring your cash flow is to review your pricing policy and set the upfront product payment. That's a normal practice used by lots of companies from different industries. Or a backup plan: create emergency funds with a specific amount of money in case your customers won't pay the bills or other unexpected incidents (like a Covid-19 thing.)
Problem: What are the effective marketing channels for promoting your product? What channel is the best from the investment return point? How much money should I spend on experimenting with marketing channels? These and many other questions come across your mind when you are developing your go-to-market plan.
How to fix it: The solution is twofold. The first case is when you have an in-house marketing team. After the market research, you focus on your unique features and value proposition. Start a campaign before the product will actually go live, interview your potential customers, and engage them to test your MVP. That way you will get quality feedback from real users and test your market assumptions. You can read more tips on go-to-market strategy here.
The second case is to hire a marketing agency who know how to handle these tasks. They will do market research and suggest a marketing strategy. So you will just pick up the tactics and marketing channels that correspond to your budget.
Fundraising: Hot or Not?
Problem: You need financial backup to grow your startup and consider options for fundraising.
How to fix it: To get required fundings, you can take a business loan or a personal loan at a bank. A blindly obvious option with a load of paperwork. If that option doesn't look attractive, let's review other ways to get startup capital:
- A family or friends loan is a more flexible way to get funds to kick off your startup.
Pros: low interest, less paperwork.
Cons: it works for a small business only.
- A crowdfunding platform like Kickstarter, Indiegogo, RocketHub, Fundly, Fundable, FundAnything, and the like.
Pros: apart from funds, you get free marketing and word-of-mouth spreading. Your business stays in your hands - no broker or investor to call the shots.
Cons: your idea might go overlooked if there are similar pitches.
- Find the Angel investor to give you financial support.
Pros: these investors give funds and, usually, coach you during the product development. And they aren't afraid to take a risk.
Cons: they will give you less money in comparison to the venture capitalists.
- Venture capital comes to great ideas and solid businesses that are already running. This option is more likely to happen to a startup that is already on the market and has a proven level of stability.
Pros: offer mentorship and keep the pulse on your performance and sustainability,
Cons: they will be loyal when your business shows a stable return on investments. Note that venture capital will run a large part of your company so you lose control over it.
Now it is your call to choose the most suitable option for your business.
Right People on the Team
Problem: How to assemble the team? Where to find people with the right combination of skills and expertise. Outsource or outstaff your team?
How to fix it: You should strive to get aboard the highly-qualified people and the right partners. Define the weak spots in your team, compile the list of skills that can fix it - and then look for future team members.
According to Forbes, it takes six months to hire someone for a startup. The good and qualified people are happily employed and don't look for a new position. So you have to seek them.
If your number one goal is a qualified tech team, then you should consider hiring an outsourcing agency. Think of it this way: you can run product development offshore - with lower expenses and no impact on the performance quality. Where to find the outsource partner? Check Clutch, Goodfirms, Upwork, IT companies' blogs (where you are now!) or simply google "outsource companies" or "IT service companies". Another piece of advice is to check real feedback and look at the portfolio.
Pros and Cons of Being or Having a Co-founder in a Startup
The startup launching is quite a tricky and difficult task. Do you want to go solo? Or consider having a startup partner? Think this way: When you have a co-founder, you literally have two heads and two skill sets. (That is better than one.) Usually, co-founders have the role of CEO or COO. Thus, like anything in life, it has benefits and drawbacks.
Pros of Being or Having a Co-founder
- Mostly, co-founders in one business are professionals in different areas. Your business gets an increase in knowledge, experience, and ideas on how to omit or solve the issues. Besides, the more people, the more work is done.
- The co-founder is support and backup. If you have to be in two places at the same time - a marketing conference and an investor meeting. Here is where a co-founder steps in and takes care of one aspect.
- The business with co-founders has more chances to become efficient and profitable. Because there is a built-in double-checker of ideas, decision-making, and business plan. And the co-founder is, perhaps, the only person who will share the entrepreneur challenges with you.
Cons of Being or Having a Co-founder
- Co-founders may have a different perception of how much time they should spend on the product. That's why the amount of commitment devoted to a project or product varies. And in the aftermath, the business growth doesn't happen.
- The experience and skillset can cause debates in the route of business development. This is where the list of options doesn't bring disruption but failure.
- The task delegation and team management can become a bone of contention, too. That affects the operational performance and urgent decision-making.
The takeaway: being or having a co-founder has more benefits than drawbacks. Yet, the decision to take a co-founder isn't easy to take back. Let this decision settle and give it a second thought.
Why Do Founders Often Fail as CEOs?
Many startup founders get inspired by the success of Jeff Bezos, Richard Branson, Jack Dorsey as CEO-founders. But the ugly truth, these are the exceptions rather than the rule. Unfortunately, the founders tend less to scale their business success.
The research run by the business schools showed: The companies with the founder-CEO were 9,4% less productive in comparison to those led by a hired CEO. Many founders with their loose management often route their company down to crash.
What are the major barriers to being an effective CEO? The personal characteristics of the founder lie in the heart of this problem.
- Founders are overconfident about their business idea and therefore the product value for a customer. That turns out in underestimating customer needs and 14% of startups fail because of overseeing this fact.
- Another tricky aspect is finance - 29% of startups run out of cash: either personal money or investments. The venture capital and angel investors prefer to give money to companies where the founder doesn't have the role of CEO.
- The strategic thinking of starting a company and scaling a business differs a lot. In the early stages, the technology startup is better to be run by a founder who has a technical background. However, as the company grows, the founder-CEO is better to be replaced. Why? Because then this position requires more advanced skills in management and outside fund injections. (We mentioned that investors prefer a founder to a founder-CEO.)
There are no CEO schools and no one has got the born-in qualities of the CEO. But as a founder, you should think more broadly to catch the opportunities for your company and employees. And when the CEO responsibilities become overwhelming for you, think about renouncing the position. That's supposed to bring more good for your business.
If you have already done all-important steps: Come up with the disruptive idea. (Checked.) Have the funds (Checked.) And now looking for a tech agency? Then schedule a call with the Apiko team - we'll help you turn the idea into a real product.
Frequently Asked Questions
What is the biggest struggle in starting a business?
The biggest struggle is threefold:
- Shaping the idea into a business plan
- Getting investments
- Keeping work-life balance
What are the biggest challenges for a new entrepreneur?
Usually, people, who have already a career or job, are opting for becoming a startup founder. That's why their challenge list begins with
1) leaving the current stable job position, and
2) getting funds for actually starting a business. Then goes
3) finding an experienced team
4) developing a product and marketing roadmap
5) handling the time management and task delegation
What are the responsibilities of a co-founder?
The position itself is dynamic and includes:
- Strategic thinking to identify the opportunities in the industry and market. The co-founder helps to develop a big-picture of the market segment. And determine how the product can fix the existing customer problems.
- Market research and marketing strategy help to define whether the idea is worth developing into a product. Here belongs social media presence, industry events, ad campaigns, and networking.
- Product development and implementation also go into the list of responsibilities. It means that you will make high-level and minor decisions.
- Financial planning and defining milestones are also lying on your shoulders. Quite often includes go-to-market expenses, operational costs, break-even plan, forecasting company budget for growth. As a co-founder, you will join either the investor search or fundraising campaign.
- In team management, you join the recruiting, hiring, and retaining talented staff members. Building an effective team shouldn't be underestimated