7 Biggest Challenges Faced By New Startups

Startups are everywhere these days. With a new trend of virtual offices and technology proliferation, even fresh graduates are not shying away from entrepreneurship anymore. 

That said, launching your own startup is no walk in the park — it requires taking a giant leap of faith. 

Alas, the statistics are not too favorable for the entrepreneurs. 

According to a statistic, over 90% of them fail.

Also, while graduates, barely out of college, are jumping through hoops to scale up their startups — there is one thing they should know. 

Your experience plays a huge role in the success of your startup. 

Folks who have considerable experience 3x more likely to succeed with a new startup than someone who is a complete novice. 

big challenges that startups face

Fair enough! Practice makes perfect, after all. 

However, I would say, there’s a fair share of hard work and luck involved as well. 

But there’s always a looming fear of failing, especially in the initial years. 

According to statistics, the first 3 years are the riskiest of them all. 


In fact, a whopping 40 percent of all businesses fail in the first three years of their inception. 

That’s why, today, we will discuss the challenges startups must prepare for in the first 3 years. 

1. Hiring The Wrong People 

You are barely starting out. Therefore, you don’t need just employees, you need people who will help you in your path to scale up your startup. 

You have to be careful about who you hire and pay. Neither do you have time nor resources to waste on someone who doesn’t turn out to be productive or useful to your startup? 

That person can still be a talented and hard-working individual, however, this doesn’t mean that they are a right fit for your organization. 

One another thing that you have to focus on is hiring the people for the right roles and responsibilities. At this stage in your business, you wouldn’t want to lose out money on hiring for a role that didn’t require anyone, to begin with. 

So, make sure that you identify the major roles and responsibilities beforehand and then get down to the hiring part. 

Otherwise, you may not even realize your mistake until it is too late. 

In fact, hiring the wrong person can show a drastic loss in your productivity and cost. 

Have a look at this telling infographic:

challenges faced by startups

Now the question is, how would you identify the right person? How do you tell apart an innovator from a regular employee? Your aim is to find someone who is willing to hustle along with you, people who are ready to give their 100 percent to make your startup grow. 

Many experts believe that hiring a talented person with a great track record is not nearly enough. Instead, your ideal candidate should demonstrate problem-solving skills. 

Of course, they should have technical skills as well but it’s more important that they have an adaptable mind to overcome any problem or hurdle that come their way. 

What you don’t need is someone who will easily buckle under pressure. 

Hope you get the drill. 

Also Read: Major Responsibilities & Roles in the Sales Department

2. Documented Procedures May Not Always Work Out 

You get an idea, hustle hard, and finally build your product. 

Now that your product is ready, you probably start to document every procedure and plan. I bet you have a documented plan for everything: how you will launch your product. What is going to be your selling process? And so on and so forth! 

Fair enough! Everyone has a plan. You wouldn’t have been able to build your startup without a plan. 

That said, don’t expect that everything will go as you documented.

If you deviate from your plan midway, there’s no need to panic. In fact, the more you would try to stick to the plan, the more ideas you would end up curbing. 

Also, this is not necessary that all the tasks you documented are necessary. When you implement your plan in real-life, you may find out that a couple of these tasks might end up wasting a lot of your time. 

After all, even statistics suggest that about 90 percent of the work done in office is a waste of time.

Kaizen principles 1

That’s a shocking figure. 

What this suggests is that even if your documented procedures may not work out, it doesn’t mean that it is a bad thing.

Maybe, it is better to take things as they go in the real-time environment. 

This is not to say that you don’t need a process — this is not what I mean. 

The key is to adapt and evolve your processes as time goes. 

You need to follow the Kaizen Method. 

Kaizen Method includes constant improvement to make your operations better, faster, and more productive to align with the current environment. 

Have a look at the Kaizen principles that you must follow to scale up your startup: 

Kaizen principles

Even Toyota leveraged this method and saw tremendous results. 

In one of the plants in the US, they asked each of their employees to contribute 8 new ideas on average to improve processes.

Kaizen principles 1

And you will be surprised to know what over 99 percent of ideas were actually implemented.


Just imagine how much you would be able to improve with this approach. 

So, make a plan, there’s nothing wrong with it – it’s always a great idea to remain prepared.

But don’t stifle new ideas, always give room to innovation and new creations.

3. Knowing Your Customer 

You have planned everything out. 

But there’s another thing that often poses as one of the biggest channels that startups face: identifying your ideal customer. 

As a result, most of them end up chasing unqualified leads, try to sell to wrong people who either don’t buy or leave the buying process in the midst. And eventually, the startup dies. 

The problem is that far too often the founders solely focus on the building part. 

Have you ever wondered what would be the destiny of Apple if it only had Steve Wozniak?

It sure wouldn’t have been worth Trillion dollars now. 

As great as the product is, one of the biggest paths to success is identifying your audience and finding the right selling method. 

To know your customers, you need to first build an ideal customer profile. 

While building your ideal customer profile, take these questions into account: 

  • What is your niche industry?
  • How much budget should your ideal customer have? 
  • Company size. 
  • The number of employees in the company. 
  • What should be the ideal age of your prospect 
  • The demographics such as their location

These were only a few points that will help you draw out a perfect ideal customer profile that will help you target the qualified leads. 

Once you know where your ideal prospects are, you can now proceed to get to know them properly. 

Connect with them on social platforms, engage them using social selling — there are so many ways to get to know your customers. Before you pitch your product, you should know what they like, what type of sales pitch would they prefer, what medium of communication would they like the most, and so forth. 

4. You Can’t Make Everyone Happy 

This is probably one of the biggest challenges for some startups. 

They try to serve everyone they can, which end up being disastrous. 

Actually, more than a challenge, this is more like a mistake that many startups commit. 

They simply assume that they have to please everyone. However, as we have established in the previous point, your goal should be to find your niche. 

Your target audience is not “everyone.”

Your target audience consists of people whose problems your product is going to solve. It is just a small set of people, not the whole world population. 

The more you narrow down your search, the more profit you can generate. 

For AeroLeads, those people are small and medium-sized B2B enterprises who want to get real-time details on their leads. 

Similarly, once you know who your product can serve and help out, then you can easily go about marketing it. If you fail at this step, then you will be floating in murky waters, which is not a great idea if you want to scale up your startup. 

Having said that, knowing what problems your target audience is having is not enough. You need to know everything possible about your target audience and your niche industry. 

Have a look at this infographic to get a perfect idea about what all you need to know about your target market: 

infographic startup challenges

You should have information on everything you can get your hands on: 

  • Where do your ideal customers hang out?
  • Where do they live?
  • What is the most important aspect in their buying process: time, price, or product value? 

Before you connect with them, you should already be aware of all such information. 

5. Getting Involved in Superfluous Meetings 

You would think that holding meetings is a good thing, why is it a challenge? It should mean that the startup is going in the right direction. 

Well, this is not exactly the truth. 

The fact is that most of the times, startup founders and employees attend so many unnecessary meetings, which is nothing but a waste of time. As a result, it leads to a lag in the productivity of the startup. 

In fact, according to statistics, 46% of employees would rather do something as unpleasant as enduring a root canal than attending a meeting. 


This doesn’t mean that they are trying to save themselves from important tasks. 

The problem is that the employees have to spend longer time preparing for the meeting than they spend attending it. 

Just think of all the work they could do in this time period. 

This is not to say that you don’t hold the meetings at all. You can hold occasional, fixed-meetings to review things such as productivity, ROI, and more, of your startup. 

Or better yet, you can indulge your employees with daily stand-up meetings.

In these meetings, all the employees and executives huddle together for about 10-15 minutes daily. These stand-up meetings, as the name suggests, are meant to be carried out standing up so as to save time and get done in a jiffy. They are a way for employees to brief their colleagues and managers on what they are working on and how much work they have done until now. 

6. Waste of Revenue 

Most of the startups tend to get carried away with their spendings. 

From expensive marketing strategies to building a snazzy, downtown office, they sometimes forget to put a plug on their budget. In the end, they end up running out of money. 

You have to see what you can financially afford with a long-term vision, and then go about making a budget. 

If you are spending your funds with an open hand, then you should have a look at this statistic. 

As high as 46 percent of startups failed because they ran out of cash. 


There are so many things that end up derailing your budget. 

For instance, you might end up hiring more employees than you actually need. Initially, you might think that they will help you be more productive and you will cover your costs but it isn’t necessary that your plan will work out. 

That’s why it is a huge risk to take. 

So, now that you know the outcome, it’s better to not get carried away with your spendings. Everything else can wait, first and foremost, try to generate a stable ROI and a couple of loyal customers. 

7. Make Your Startup product-driven to find more success

In the words of Lee Lacocca, “When the product is right, you don’t have to be a great Marketer”.

There is a huge competition and high level of saturation in every industry. There are thousands of products for every need. Every day, hundreds of new products are launched. But most of them fade away into oblivion, and only a few become successful. The success or failure of a company mainly depends on three things: a good sales strategy, a good product or both.

However, there is a difference between sales-driven companies and product-driven companies. While sales-driven companies focus on sales and revenue, product-driven companies are focused more on technology, since they believe that a good product sells itself.

A sales-driven company puts much time and effort on recruiting and training good sales representatives for selling their products. On the other hand, a product-driven company can concentrate on devising the finest products, that will help them stand out from their competitors in the marketplace. They focus on creating products that customers will value, and which can create a positive difference in the lives of the customers.

A great example of a product-driven start-up is Facebook by Mark Zuckerberg.  Viacom made three attempts to purchase it, with the last offer being a price of $750 million, in 2006. A 22-year old Zuckerberg refused it, because he believed in his product, and the rest is history.

A product-driven company can easily hire a proven sales executive to boost sales and supplement a superior product, but it is not so easy for a sales-driven company, since they cannot simply hire or develop a new product overnight.

Thus, product-driven companies tend to be more successful.

That’s a Wrap 

These were some of the biggest challenges that startups must prepare for in the first three years. 

We know that it’s hard to know what to focus on when you are barely getting started — we have been there as well. 

You have to balance between your funds, time, and productivity. 

However, before anything, make sure you identify your target audience so that you don’t waste your resources. 

While you are at it, have a look at these Top 10 Sales Tools for Startups that will help you scale up your growth tremendously. 

About Deepti Jain

Deepti is a senior content writer with AeroLeads. She spends a lot of time brainstorming ideas and writing marketing and sales content. She also has a knack for writing and reading about politics and prevalent social issues and regularly pens letters to the Editor of The Hindu newspaper. When she is not working, you’ll find her socializing with friends or binge-watching Netflix. (And devouring sushi).

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