Challenges Facing New Startups in Silicon Valley - Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: TABLE OF CONTENTS INTRODUCTION 3 Challenges facing new startups in Silicon Valley 3 Comparison between challenges in Silicon Valley with Australian startups 5 Ways young startups can maximize their chances of survival when starting up 6 Conclusion 7 REFERENCE 8 Executive summary This essay summarizes the challenges that are facing new startups in Silicon Valley, compares it with the challenges faced by startups in Australia and how business startups should maximize their chance of survival when starting up. This study was based on research regarding challenges faced by startup companies in Silicon Valley and Australian firms, researched of overview company challenges and basing arguments on laid theories in the books. Business startups face many financial challenges, human support and commitment from entrepreneurs due to lack of resources. Lack of motivation among human resource has contributed to failure of startup businesses in Silicon Valley and abroad. However, with proper management of resources among entrepreneurs, startup business firms can achieve high level of profitability. INTRODUCTION Business is an entity that exists with an aim of achieving high levels of profitability through exchange of goods and services. Entrepreneurs are the core pillars in developing new business startups within an economy. Silicon Valley is among major places that are known in coordinating many businesses. Silicon Valley over the past decades has experienced high business growth due to development of new startups. However challenges always prevail in new business entities that may affect the operation of the business. Challenges facing new startups in Silicon Valley New technology seems to be the key success in achieving high profitability in any business firm. Production technology, management and business coordination requires business firms to adopt effective technological advancement that conform their goals and objectives. Every technology comes with risks that may affect the business negatively or positively. Furthermore, to adopt a new technology is very expensive (WIRED, 2014). This requires entrepreneurs in Silicon Valley to divert their funds towards adoption of technology at the expense of other core activities. New business owners depend on equity and debt as major sources of finance. However, relying on more debts subjects a business entity into a risk. This implies that entrepreneurs have to be more liquid in order to adopt new technological advancement. Small business entities face stiff competition from larger firms that enjoys economies of scale. Large business firms have occupied larger market share, they diversify their products, engaging in mass marketing, mass production and distribution. It becomes difficult to enter into market and gain wide recognition. It becomes hard to adopt new market strategies that can be used to increase marketability of products and services (WIRED, 2014). Changes in market trends have made it hard for small business startups to cope with global businesses. Behind the success of every business is to engage in global marketing of its products and services. According to Shawn Livermore, chief executive officer of an outsourcing platform in Ziptask, many business startups ends up in a zombie state because there are unable to achieve their initial set goals and objectives (WIRED, 2014). It is essential for every business to develop an effective business plan that does not only dispose the intentions of the owner but also acts as a guideline for implementation of activities. According to New York daily business journal, living a big cap between your objectives and set goals sets a path for mistakes and failure. It argues that whenever a new entrepreneur fails to achieve his initial objectives, he should try again but in a more tactical manner. New business startups do not have effective business connections with related companies that have achieved market stability. Partnership involves starting new business with another group or member. However, many entrepreneurs lack proper channels to engage in good partnership with existing companies (WIRED, 2014). Relating with better fields seems to be a better way to grow. According to professor Duke, department of business, University of Chicago, when it comes to making decisions regarding which company to partner with, then a new entrepreneur should ensure that the policies are sound and favorable to his business. Is there any potential of growth? How is my business benefiting? Is it cost effective? Every business firms requires employees and technical management team that can offer best services to customers. Business is based not only on cost of production but also on quality of satisfaction derived by a given customer when consuming goods and services. Many business startups may face a challenge of hiring employees to handle their tasks at various department of the business (WIRED, 2014). They may lack qualified personnel at affordable cost to offer effective services to customers. Comparison between challenges in Silicon Valley with Australian startups The budget that was produced in Australia for financial year 2014/15 makes everything to look bleak for small enterprises and startups in Australia. According to research done, if small business and startups in Australia do not receive continuous support, then there is high risk of experiencing failure in business sector. Silicon Valley is a region where risk taking visitors, new technology is established and new business developments coexist. It is a place where there are many business opportunities where new business can be established. Despite the business challenges that exist in Silicon Valley, it experiences high growth phase due to wealthy investors. Many entrepreneurs in Silicon Valley will work for longer hours while striving to achieve good business policies that favor their businesses. Startups in Silicon Valley are pragmatic and optimistic towards achieving positive returns. Despite having effective supporting mechanisms, the entrepreneurs are motivated intrinsically towards achieving their set goals and objectives. Supporting mechanisms include daily rewards to employees and their customers, strong capital investments, punishment of silly mistakes, good employment market, innovation, quality management of resources and stock options [Sha07]. Australian startups have the same characteristics as those of Silicon Valley but different supporting mechanisms. Silicon Valley has many influential mechanisms for one to enter into a new business entity than Australian startups. This implies that, investors find it easier to invest their business in Silicon Valley because business information are readily available to investors for effective decision making. Every investor requires a clear note quoting a business’ operating activities. It perceives effective investment decisions among many investors. The objective of every business owner is to indulge in less risk business activities while maximizing shareholder’s wealth. According to Mickiewicz, investing in Silicon Valley is meant for engineers just like Hollywood is to actors. This implies that, great entrepreneurial minds are best suited in Silicon Valley due to existence of effective business opportunities. It is a place where small business firms and new startups can experience high growth rates and be able to compete at global levels showing every type of impact and opportunity. Ways young startups can maximize their chances of survival when starting up Entrepreneurs are optimistic, risk-takers and committed business investors are quick in detecting business problems and devising an effective solution is easier. However, to create an effective marketing strategy that meets the objectives and goals of a given business is a key to achieving high success. Entrepreneurs intending to start new business firms should strive towards establishing effective financial base. Funds are required in every business firm to plan, organize and to carry out business operations that are geared towards achieving business goals and objectives. Strong financial base forms strong business operations. The aim of a new startup business is to enter into new markets, identify new business opportunities, to acquire large market growth and to cap market competition. This strategy requires heavy investment of funds in order to achieve its objectives. It is a regular practice for a new startup to develop a strong business culture and organization structure that defines clearly how operations should be made. The culture should be comprehensive and positive; it should be leader oriented enabling the organization to achieve its goals and objectives. The culture should promote self-dependence of the business rather than relying on other business firms for existence. [Mug09] Centralization of operations does not only make management activities easier but also integrates all business departments within a business entity. Small businesses and startups find it difficult to integrate their business entities. According to Maxwell, managing director of Bidco LTD, it is hard to manage multiple businesses at the same time. It becomes easier and profitable to integrate diverse businesses. New entrepreneurs can use existing assets to finance new business startups. It is essential for entrepreneurs to acknowledge the fact that it is easier to start a new business at higher growth phase as that of existing businesses. This practice enables entrepreneurs to employ their skills, technics and expertise in their new businesses. Conclusion Business startups are new entities that enter into new markets through the efforts, skills and technics employed by entrepreneurs who are optimistic and committed towards achieving their goals and objectives. Silicon Valley is among major business destinations that has many support mechanism geared towards achieving new business opportunities, wealthy investors and incredible business ideas. However, Australian startups have the same characteristics but different mechanisms. Although business startups faces many challenges such as lack of financial health, high technological advancement, hiring problems and lack of business partnership, startups can experience high levels of success if they adopt healthy financial plan, good strategy and maximizing their skills and technics. REFERENCE Sha07: , (Shawn, 2007), Mug09: , (Mugenda, 2009), Read More