There is no perfect algorithm for starting a business. No five step process. But there are some challenges that a start up always faces. Terpstra and Olson did a study back in the late 80s where they asked the fastest growing companies on Inc500's list what their major challenges was in the first year of operation and in the following years. After removing a bunch of companies that were to old, had changed CEO since their start up or for other reasons did not qualify, they were left with 113 respondents. The categorized the answers and came up with this list (frequency is the number of answers, this is close to percentage as they close to a 100 companies):
First-Year Classes Frequency Percentage
1. Obtaining external financing 17 17
2. Internal financial management 16 16
3. Sales/Marketing 38 38
4. Product development 5 5
5. Production/Operations management 4 4
6. General management 11 11
7. Human resource management 5 5
8. Economic environment 3 3
9. Regulatory environment 1 1
1988 Classes Frequency Percentage
1. Obtaining external financing 1 1
2. Internal financial management 22 21
3. Sales/Marketing 23 22
4. Product development 2 2
5. Production/Operations management 8 8
6. Organization structure/design 6 6
7. General management 14 14
8. Human resource management 17 17
9. Economic environment 2 2
10. Regulatory environment 8 8
What I would argue is that these challenges are some valid for all companies. The activities to meet this challenges vary. Ida and I will look at how social media can be applied to perform these activities and excel. Now as the challenges of all organizations are similar I would argue that most of our work will be something all can benefit from. But first, which activities does a company need to do well to meet these challenges?
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