Cash and marketing are the two biggest concerns for Australian start-ups, according to two separate pieces of research released today.
A study conducted by Regus found that cashflow is the biggest worry for new businesses, with 57% citing it as a primary concern.
Finding customers was identified as a top challenge by 49% of those polled, while the cost of marketing and promotion is what keeps 37% of entrepreneurs awake at night.
Jacqueline Lehmann, country head of Regus Australia, says: “Retaining cash remains key for successful start-ups.”
“By remaining nimble, new businesses can invest where they need it the most: in finding and developing customers.”
These concerns are also reflected in the responses of 450 start-ups that applied to the PushStart Mentor Connect process.
The applicants to the tech start-up accelerator scheme were most concerned about funding, closely followed by marketing and sales.
Kim Heras, founder of PushStart, says he expected the feedback on funding but was surprised that concerns over marketing trumped that of technical expertise.
“I’m hoping that this is a sign of the maturity of the tech sector and that start-ups realise that market risk is a bigger issue than technical risk,” he says.
“On the other hand, there are models that start-ups can use, such as the Lean Startup way, to deal with the sales and marketing aspect but many don’t know how to get to market.”
“Some start-ups don’t understand how they can do it themselves. The best way is simple – talk to your customers.”
“That’s the way in nine out of 10 cases that you will find out if you have a scalable business that solves a real customer problem. Once you get beyond that, you can look at things such as SEO and also legal and accountancy issues, which you need to get neat and tidy – but only once you have a real business.”
“People understand that you can now start-up with less money than you needed a few years ago, but the dilemma is how much you do before you launch.”
“Some start-ups struggle with the idea that they don’t need to spend hundreds of thousands of dollars to get a bulletproof business before they get out there and test the idea. So they think they need lots of funding to help them.”
“What you need to grasp is that you need to get to market quickly and learn your lessons there.”
Interestingly, the Regus study also found that less than one in three small firms are happy with current government schemes to boost business growth.
Seven in 10 said they want tax exemptions put in place to spur start-ups, while low interest loans and mentoring schemes are also popular.
Lehmann says: “In fostering the growth of start-ups, the human element is often overlooked, and it is encouraging to see SMEs valuing support such as mentoring, information and networking as key to their business growth.”
To view the top 10 challenges faced by Aussie start-ups, as well as sentiment on business conditions and government policy, click on the next page.
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