Founding and growing a startup can be challenging, but it’s not an impossible feat. 

About 31% of local startup founders in the Philippines reported “earning annual revenues ranging from over ₱2m to over ₱100m,” according to a PricewaterhouseCoopers survey in 2020. 

With an increasingly diverse ecosystem and high-achieving players in the space, success as a Philippine startup shouldn’t be dismissed as a pipe dream. 

But there are common pitfalls that founders and their teams should be aware of. We’ve listed five of them below, as well as tips on how to overcome these hurdles.

Problem #1: Running out of money

Solution: Pursue diverse strategies to create a sustainable funding pipeline.

Many startups run out of money before they can make a profit or even before launching their product/service. It’s crucial that you map out potential sources of funding and develop a plan on how to guarantee support as you grow. 

Here are some suggestions to help ensure your startup’s money situation is solid:

• Find angel investors. This type of investor is more likely to invest in the early stages of your business. Look for potential angel investors in your industry, examining their track record and portfolio companies.
• Pursue government grants. Consider applying for a grant from government agencies with programs to support certain types of startups. These include the Department of Science and Technology, the Department of Trade and Industry, and the Department of Information and Communications Technology.
• Maintain a lean operation. In the early stages, fiscal discipline is crucial. Identify operational expenses you can live without in the meantime, such as office space rent and top-tier yet pricey equipment.
• Manage your accounts receivable. Once you’ve begun making sales, keep a close watch on your accounts receivable. Have a system in place to ensure payments are on time. Depending on the nature of your product/service, you can implement upfront payments or refundable security deposits.

💡Launch your startup with a virtual office

Office space rentals can take up a lot of your startup’s budget. A more flexible and cost-effective solution is a virtual office, a physical business address that doesn’t require a lease contract. 

Loft’s startup packages come with a Virtual Office address in BGC, Eastwood, Makati, and Ortigas. Our startup packages all come with end-to-end business registration with relevant government agencies. 

Loft’s team of experts will do the heavy-lifting to ensure your startup is duly registered. So you can focus on growing your team.

Call us today at (63) 917 899 111 for a free proposal and price quote. You can also reach us at [email protected] or by using our contact form.

 

Problem #2: Weak product-market fit

Solution: Conduct in-depth market research before launching a product or service.

Good product-market fit isn’t a given. You’ll need to thoroughly examine your chosen market segment and identify specific customer behaviors and underserved needs that you can capitalize on. You can also enlist the help of external firms and providers when doing market research.  

As you learn about the market, take note of the quality of data you’re getting. Make sure you have a healthy mix of: 

• Primary data, which is information acquired through your own efforts.
• Secondary data, which is pre-existing information from reliable sources like government agencies, research firms, and the academe. 

You can conduct surveys, interviews, and focus group discussions online or offline. Consider giving participants an incentive (monetary or non-monetary) to take part in your data-gathering efforts.

After launching a minimum viable product, keep using customer feedback to help inform future improvements.

 

Problem #3: Lackluster marketing

Solution: Develop a distinct brand identity that will help drive awareness around your startup.

It can be challenging to market yourself as a startup, especially in a sector that’s loaded with tough competition. Insights gleaned from your market research will be important in creating brand identity and messaging that truly resonates. 

If you can find a marketing strategy that aligns with your target audience, you’ll be in a better position to build awareness and translate that into sales. 

Apart from offline channels like print, radio, and TV, the following online channels should be part of your overall strategy: 

• Website development: A website essentially functions like a digital business card for your company, providing an overview of what you’re offering. Additionally, search engine optimization helps increase your visibility in search engines like Google. 
• Social media marketing: Social media platforms like Facebook, Instagram, YouTube, and TikTok have billions of users — offering a huge audience for your marketing efforts. 
• Content marketing: Through blog posts, articles, infographics, videos, podcasts, and, you can provide valuable content to your customers while giving them a snapshot of what you can offer. 

Plus, make sure to track key metrics to learn how you can improve. Consider the following:

• Customer acquisition rate: How quickly and efficiently you are acquiring new customers? 
• Customer lifetime value: How much your business is earning from each customer over their lifetime?
• Customer retention rate: How many of your customers remain loyal over time?

 

Problem #4: Inability to attract the right talent

Solution: Identify people with the right mix of hard and soft skills, while screening for culture fit.

Growing your small team is crucial to success. But hiring the wrong people in your team can be as harmful as not having enough team members.

Start with clearly defined job descriptions and delineated responsibilities. Ensure each position aligns with product/service demand. 

Some startups may hire people with wide skill sets in anticipation of varied roles or multiple hats. Others may focus on technical expertise that complements the founders’ strategic vision.

Once these needs are established, you should determine where you are going to find these people. Aside from the usual avenues such as job boards, find the relevant platforms and forums where certain types of professionals are active — Reddit, LinkedIn, Facebook groups, and so on. Plus, consider how your competition is sourcing their talent.

Problem #5: Co-founder friction

Solution: Establish processes for decision-making and conflict resolution between co-founders early on.

Let’s start this off by saying that conflict is a natural part of the human condition. It can improve relationships when managed properly. However, when left unchecked in a startup with two or more co-founders, that friction has the potential to plant the seeds for a startup’s downfall. 

Address some of the common sources of friction by clearly defining job descriptions and each founder’s share in equity and compensation. 

But more importantly, co-founders should set realistic expectations with each other. 

Who’s taking the lead on product development? Who is the face of the company and who is mostly doing behind-the-scenes work? When everyone is aligned on key questions like these, it’s less likely for friction to boil up into a larger conflict.

Problems may still arise even with these measures in place. So if you feel that it’s needed, you can also bring in a third-party mediator to help build consensus.

Get your startup up and running with Loft

By being mindful of the common problems that startups encounter and preparing appropriate solutions, you’re improving your odds of success. 

These are all time-intensive activities that require your undivided attention. Loft’s startup packages help you focus on growing your business. 

We provide end-to-end business registration and corporate compliance services, with a dedicated team of experts to help ensure timely filings. 

You may complete the short form below to get in touch with our team.