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Most Common Challenges Startup Company Must Overcome
2019-06-25 /

Common Startup Company Challenges

Launching a startup company can be an exciting endeavor for entrepreneurs to make their business dreams a reality. In recent years, an increase in access to funding, tech-driven innovation, and educational courses allowed virtually anyone to start their own business. Now more than ever, it’s the best time to engage in the startup culture; an industry that shows no sign of slowing down and will only grow even more in the years to come.

While entrepreneurship sets the stage for continuous innovation and a competitive economy, it’s far from perfect. In fact, it is often filled with challenges that many startup owners failed to address, leading to some startups to die before they could even take off.

According to Shikhar Ghosh, a senior lecturer at Harvard Business School, venture-backed companies that failed to realize a return on investment are often met with a whopping 70-80% failure rate. It’s a disheartening dose of reality; one that entrepreneurial hopefuls should ponder on and motivate them to work smarter and better. So, how to go about surpassing these startup company challenges?

Below is a rundown of the challenges that startup entrepreneurs deal with today. We also provide some helpful advice on how to overcome them and minimize the risk of failure.

7 Biggest Startup Company Challenges

Lack of Research and Planning

One of the most common reasons why a startup company fails is they did not plan strategically. Or it could be a possibility that they have a plan in place but they neglect to cover other aspects of the business that are just as important.  Fundamental areas such as funding, recruitment, sales, product development, customer support are critical to the success of a business plan.

Aside from a great business plan, having a contingency plan in place is often recommended. Allow yourself room for surprises, as there could be setbacks or challenges along the way. Anticipate all possible outcomes. Consider all key areas of your business, prepare a business plan, and write down all the details for your business plan.

No Business Know-how

Anybody can create their own startup. However, this could also mean that people with no business acumen may not know the limitations of their projects. Whether it’s managing a project from a business perspective or using the right team to execute the plan, it’s vital to delegate the power to people with in-depth business expertise and experience when it comes to building a startup company.  

Finding Reliable Partners

Working with trustworthy partners is critical to success in business. This is especially true for startups. In this digital age where businesses are at the mercy of evolving consumer demands and technological trends, finding the right partner is essential for any startup’s survival.

Choosing to go through a partnership can give startups great leverage.  However, they need to consider all angles before collaborating with prospective partners within the ecosystem. To maximize the benefits from a partnership, startups should work with organizations with a solid market presence and credible reputation within their industry.

Adequate Funding

Most Common Challenges Startup Company Must Overcome

It goes without saying that you need money to run a startup. You will need the capital to develop and market your products, hire employees, rent office space, and so on. Issues with money will loom its ugly head eventually unless you have strong cash flow management in place.

In the early stages of growth, startup expenses are almost always higher than revenues. This is to justify all the operational costs to manage your business. It will come to a point when it will feel like you are bleeding dry, and in most cases, you are. You need a concrete plan to manage your cash efficiently so you don’t go on empty-handed just when you are about to get your startup company off the ground.

To triumph over your cash flow woes, we recommend that you plan and anticipate major expenses along the way. Here are some helpful tips to preserve your cash flow:

  • Set up an advanced payment scheme with clients in advance prior to product delivery or work.
  • Manage your fixed and variable expenses well (keep your fixed expenses at a minimum).
  • Avoid adding more people in the payroll beyond what your process needs.
  • Hire a bookkeeper or accountant to ensure there are checks and balances on cash flow

Overlooking Sales and Marketing

While marketing expenses can make a huge dent in the startup budget, it is a necessary spend. You can’t depend on word-of-mouth alone for customers to find you. When you neglect or not execute your marketing strategy well, you may not hit your ROI (return on investment) for this expense.   

To be successful at promoting your product or service, your marketing strategies need to be data-driven. Know your sales funnel and adjust it when needed. If possible, you can delegate this task to others with more expertise and industry knowledge.


A small startup may find that most of their precious time is spent on the recruitment process. Understanding the exact skills and qualifications you need, and having the right people on board, is essential to a startup’s survival and growth.

As the company grows, they might find themselves with a different set of challenges such as finding out that you hired people for the wrong role, or placing the right people in the wrong role. This is the reason why you need to design your recruitment strategy before you even start. Make sure to align these key roles with the business goals you’d like to achieve.

Stiff Competition

You may have the best products or services, but understand that the marketplace could already be saturated by then. So, put yourself in the customer’s shoes and ask why they should choose you over your competitors? What makes your brand special over the others? It’s important to know how you stack up against the competition and to stay confident that you can bring more value to customers. Have the best strategy in place in order to adapt to the ever-competitive market.

Listen to Episode 3 of the Startup Hustle Podcast – Why Do Startups Fail?

The Road to Success

The road to startup success is never easy but it can be achieved if you have the proper mindset and strategies in place. Now that you know what these biggest challenges that most startups face, this will help you make well-informed decisions and execute a concrete plan to overcome them.

Here at Full Scale, we make it easy for startups to get their business ideas off the ground. If you’re not sure how to start, you can count on our startup founders, Matt Decoursey, and Matt Watson to help your business grow. They have a wealth of industry experience and knowledge to get your offshore team to the next level. Get your free consultation today.

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