7 Most Common Challenges Faced By Startups

7 Most Common Challenges Faced By Startups

Seven Most Common Challenges Faced By Startups

You must have heard about the theory ‘survival of the fittest’; you must also have heard a statement: “A smooth sea never makes good sailors”.

Both the ‘survival of the fittest’ theory and the statement above fit really well with the world of startups. And the world of startups is a violent one.

There are 150 million startups in the world today with 50 million new startups launching every year. On average, there 137,000 startups emerging every day. These are huge numbers by any standards.

But the question remains, how many startups tend to survive the violent waves of change that have completely transformed the very nature of today’s startups?

Yes, there is a huge paradigm shift. And that shift has challenged the overall functionality of startups.

Challenges are everywhere. And businesses – in general and startups in particular – are no exception to myriad of challenges that we face today.

I am not going to go into details about what is a startup and how it works; we all know that. In this particular blog post, I am going to elaborate about some of the biggest challenges being faced by small business startups.

Challenges Faced by Startups

1. Fierce Competition

The corporate world is quite fierce. There is always a competition going on between the giants. Competition poses one of the biggest challenges for the survival of startup businesses.  And if you have an online business startup, the competition gets tougher.

The competitive environment keeps the startups on their toes, as there is no margin of error available. Both B2B and B2C organizations always tend to feel the heat of the fierce competition. In order to survive in this competitive business environment that covers both traditional and online businesses, the startups need to play aggressively, and punch above their weight to gain the much needed recognition amongst the clusters of ever challenging and expanding businesses.

2. Unrealistic Expectations

Success does not come alone. It brings expectations with it. Most of the times, these expectations seem realistic, But in the real sense of the word, are merely unrealistic. This same concept holds true for young startups.

Startups tend to face challenges when they set ‘unrealistic expectations’ following a booming success. Remember, success is short-lived and expectations never end. This is where startups need to translate what the real expectations are? Sustainability is the name of the game. And sustainability requires consistent efforts.

In order to succeed in a competitive business world, startups need to have high but controlled expectations, keeping view of the resources available, the extent of growth potential, and other market factors as well.

3. Hiring Suitable Candidates

One of the most important factors that define organizational culture within a startup company is the synergy of the team. A team comprises of individuals with similar capabilities and identical focus. In order to develop a highly successful team culture, organizations in general – and startups in particular – need to hire suitable candidates.

There is a huge pool of aspiring individuals available. Selecting a suitable candidate that fits the job well enough is a peculiarly tricky task. It is one of the biggest challenges facing the startup businesses in this digital age. When hiring a suitable candidate, organizations must remember one golden rule: Birds of a feather flock together.

4. Partnership Decision Making

Partnership is the essence of success. And this logic holds true for startups as well. In this ever-expanding and ever-changing digital era, where organizations need to battle hard for their survival, startups also find it difficult to find trustworthy partners. It’s really a big challenge for startups today. And as far as tech startups are concerned, stakes in partnership are much higher for them.

Going into a partnership pays great dividends for the startups, but they need to consider a variety of factors before making any decision to collaborate with another company working in the same ecosystem. To reap out maximum benefits out of a partnership, startup businesses should look for organizations that enjoy a sound presence within the market and a good reputation amongst the industry giants.

5. Financial Management

Money begets money. Remember the fact that when income increases, the expenditures also increase. There is no doubt about it. One of the biggest challenges that startups face today relates to financial management.

It is a fact that small startups rely heavily on financial backups from the so called investors. At times, when there is a cash influx, small firms, most importantly startups tend to find it really hard to properly manage their finances, and they bog down against the pressure.

In order to address this kind of situation, startups need to play a safe and cautious hand, by keeping all the cards close to their chests. Taking help from a reputed financial consultancy firm may really help out in managing financial crises facing today’s startup businesses.      

6. Cyber Security

This is the digital age. And surviving the challenges in this age requires small startups – especially the ones operating online – to be super agile to counter the so called online security threats. Hackers are everywhere, and they are going to take advantage of any loophole within the systems installed within a startup firm.

The rate of cyber crimes has increased dramatically during the past couple of years. The percentage is going to increase in the coming years as well. Startups that are active online do face online security threats. Be it unauthorized access to startup’s sensitive information, employee records, bank accounts’ information, or any other related information that is deemed important for the survival of a tech startup, they are at risk.

In order to safeguard the all important online data, startups need to have robust and military-grade security systems in place. A virtual private network (VPN) connection serves the purpose of protecting a startup’s information, and employee records, by offering the much needed encryption and data security to the startup’s employees, thereby restricting unauthorized access to organizational data over the web.

7. Winning Trust of Customers

Customer is the king. And that’s absolutely right. Winning a customer’s trust is one of the most important challenges that businesses in general – and startups in particular – face today. With a highly satisfied and loyal customer base, startups can scale and make progress towards excellence.

Customers are the real force behind a startup’s success. Their word-of-mouth power and their presence on social media can give tech startups an edge against all the traditional businesses.

To win customers’ trust and loyalty, startups need to work aggressively to implement a customer-centric working philosophy, so as to enable them to succeed in their pursuit of attaining the height sustainable growth and progress they desire to achieve in this tech-savvy and challenging business world.

Well, this brings us to the end of this blog. It is a fact that there is no single stop solution to the surmounting challenges facing the startups in this age. You don’t have a magic wand either that can help you solve the so called challenges overnight.
In order to face and tackle the so called challenges of a violent business world, startups need to be resilient and focus on keeping their integrity in tact against all odds. I have only covered seven of the biggest challenges facing the startups in this age. Now, it’s your turn to contribute to this blog with your suggestions and ideas in the comments’ section below.

Author Bio: Brad Haddin is a tech savvy person, who loves to explore the new happenings of the tech industry. After completing his Masters in Computer Sciences from the University of California, he worked for a number of IT firms. Currently, he is a consultant for Ivacy, a top-tier VPN provider. He loves to write about technology-oriented businesses with a nice flair of authenticity. Connect with him @bradhaddin81 on Twitter.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

Get started here
Download our all-new eBook for tips on 50 powerful Business Diagrams for Strategic Planning.


  1. Dibakar Bala

    Unrealistic Expectation is a serious problem for Startups. I will also like to add overvaluation by investors as a factor of failure for startups

  2. Alex Harper

    In fact, I would even put Hiring as the most important factor. A good team can truly make and break a company. Hiring process’s should always be as stringent as possible.

  3. Ruth Johnson

    Really informative article! Thanks for the great share.

Leave a comment


five + 6 =

Back to top