Did you know that most startups fail during the first few months? In fact, the major reason is the lack of proper market research and industry analysis. However, there are other challenges faced by startups that will have devastating effects on the whole process of startup business development.

You’ve already developed a bold idea for a startup and you’re full of enthusiasm and dedication to build a successful business. Am I right? But what if a similar product already exists in the market? Or how to deal with monopolistic competition and do not fail in your decision-making process? And have you considered what consequences would be made after hiring the wrong team? Furthermore, what about financial management, tech stack, and marketing strategy? Indeed, the mentioned challenges should be carefully studied in order to be aware of possible risks as well as to create a healthy environment for your startup development.

Read our article Startup Development Phases and is Peculiarities

Among the most common mistakes that kill startup might be a single founder, bad location, derivation idea, marginal niche, etc. Our team focused on the top 5 startup challenges that could be fatal for you and your small business. Let’s figure out what are these challenges and how you can deal with them.

1. Bad Market Research

Both startup and established business will sell more effectively, target new customers and identify new opportunities if they can implement the market research correctly.

Surely you have heard a thousand times about the importance of market research. But it is really crucial to fully understand and follow this piece of advice. Bad market research may be negatively resulted in your further business development by means:

  • No market need your product. Try not to dive into the idea only and think widely about the business value of your product. Investigate the market, choose the right niche and think about what new features or solutions YOU can bring by your product.

  • Poor product. There are thousands of products launch every year, but not all of them are in demand. In order to be on top, your product should solve problems and makes customers’ life easier. Find customer pains and think of possible solutions. Precisely, these features will be the basis of your product.

  • Ignore customers or having no specific user in mind. You should create the profile of your potential customer. Do not try to please everyone with your product - by doing this you have all chances to fail. Instead of it, choose the target audience which will be your future users and try to please their demands and wishes. Think through every little detail about the target audience to have a clear understanding of what features could be useful for them.

  • Fierce competition. The business world is quite fierce. There is always a competition going on between products, services or companies. 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. Both B2B and B2C organizations always tend to feel the heat of the fierce competition. In order to survive, the startups need to play aggressively and punch above their weight to gain much-needed recognition.

Moreover, market research is necessary for avoiding unrealistic expectations - which is another startup challenge. At the very beginning of your startup development, it might seem that everything is possible to achieve with minimum diligence. However, the feeling could be delusive. Market research will navigate you through the expectations straight to the startup business strategy. So a chance to set unexpected results will be minimized.

Haven't decided about the startup idea, yet? Read our article Top 40 Small Business Ideas for Your Startup

2. Not the Right Team

Hiring suitable candidates are crucial to develop a top-notch product. It all about skills which is a basis not only for business to survive but also to expand and evolve in future. Knowing the exact skills you need — and how to get those essential people on board — might be the determining factor in how well your startup thrives. The specialists such as project management, tech developers, sales and marketing managers are must have in every company that has an orientation towards success.

If your startup is related to the software industry, and you don’t have the required background in tech development, you might require a specialist form the outside. Thus, depending on the scope of tasks, complexity, and deadlines product owners consider whether to choose a freelance web developer or a development company.

It’s important to find a reliable, responsible and skilled partner that will follow your expectations and actual budget. Before making a decision you might consider all the pros and cons of each option. It is crucial to mention that there is no “bad” or “good” choice, therefore, you should evaluate these options from different perspectives and decide on your own what will suit you the best.

Read our article Freelancer vs Web Development Company: what to choose?


3. Lack of Planning and Poor Management

Surprisingly enough, a lot of startups fail because they forgot to plan. Or perhaps they did, but just never covered all the bases. Make a business plan your priority. Your business plan should cover sales, product development, funding, etc.. Additionally, the mentioned areas should be flexible enough to cope with unexpected outcomes if the events take the wrong turn. Obviously, you could not foresee the potential risks that may happen in the future, but with the detailed business plan, you will be prepared for 88% of conducting strategic development of the business.

Ineffective management is a luxury that startups simply can’t afford. For instance, a team that worked effectively in the initial stages may face difficulties as the startup expands. As a leader, you should build healthy relationships so your team will be familiar with how and how is not getting results and be adjusted to the changes in the business. Develop transparency into your management team’s decision-making process, so everyone on the team knows how the important decisions get made.

4. Neglect of Marketing and Sales Strategies

Quite often some startups did not put enough effort into maintaining business strategy in relation to marketing and sales. In fact, over 25% of startup’s problems are the reason for neglecting marketing and sales resources.

Some expected that sales will grow organically without any strategy. The other think, target audience will expand naturally without the additional promotion of the product. However, you need to have a concrete effort to grow business with a properly structured plan to promote and generate sales and digital presence of your startup.

In fact, due to marketing, the business has the potential to grow, while sales management will increase a startup's revenue. Affiliate, content, agile, social media marketing, as well as a social network and viral marketing, are only a small part of the wide list of strategies that you could use.

You should take in mind, the mentioned strategies involve much more than merely getting hold clients. It is all about creating a brand image in the minds of customers. Once a business has a brand it will begin to construct a reputation.

5. Financial Management

You should not underestimate the power of financial management. While it sounds overwhelming and perhaps boring at the same time. It could be defined as a serious challenge for startups.

Asking for financial support from the outside. Profit is all you need from starting a business. Nevertheless, your business will eventually fail without positive operating cash flow. You might tend to have a loan or look for investors, but we recommend you to avoid these temptations. In fact, if you can’t sell now with your MVP to a minimum audience, then more financing will scale a broken business model and ruin your business. Get sales with a business model that works, then scale that model until it breaks. Then do it again.

Read our article The Challenge of Fixed-Bid Software Projects to know about pros and cons of this kind of projects.


6. Bonus: Wrong Tech stack for your product.

If we are talking about the chance of developing the web app or mobile app for your startup, you may face certain issues regarding tech background such as:

  • Launching an MVP may take twice as long as planned;

  • An MVP may not scale effectively;

  • Adding new features to the app could easily break old ones;

  • The code base may hard to maintain and iteration will be very slow;

  • The time-consuming process of adopting a new developer to the project;

  • Refactoring might be worthless.

To solve mentioned issues it is crucial to hire highly skilled developers who will be followed the best practices of tech development. For instance, our team was issued the best practices of Angular framework that allow building a scalable product with clear data model and architecture. It was developed through our personal experience and knowledge to simplify your life and build a successful online product.

In addition, if your startup is a marketplace or will be related to either healthcare medicine or fitness app, you should be careful in discussing the development aspects regarding the mentioned niches. While marketplace development is oriented on the product presentation, customer service, and supply-demand gap, the healthcare and fitness apps should be focusing on data security, IoT integration, social integrations, and notifications.

Read our article about “7 Expert Development Tips for Building a Startup”


Did you know that most startups fail during the first few months? If you do not want to be included in these statistics, you should be familiar with the basic challenges startup face. Thus, except for a single founder, bad location and a marginal niche, our team choose top 5 common startup issues and how to deal with them.

Therefore, bad market research will decrease your product functionality and value, while hiring the wrong team might be affected by the development of the product as well as the business strategy of your startup. A lot of startups fail due to poor planning and weak management. Bear in mind that planning should cover all required areas for the further evolution of the startup, like available resources, risks, and budget. Make a business plan your priority. Quite often some startups did not put enough effort into maintaining business strategy in relation to marketing and sales. While marketing strategy could convert the target audience to your consumers, following sales strategy will boost your revenue and will allow expanding your startup.

A startup needs to follow high but controlled expectations, keeping in mind the available resources as well as growth potential in order to succeed in a competitive business world.

In case you have left any questions or you have any suggestion, feel free to contact us and we will help you in any inquiry!