Challenges facing startup businesses are found in many areas of a business and can include:

  • Diversity
  • Valid products
  • Target market
  • Culture
  • Resources
  • Communication
  • Industry
  • Finances
  • Marketing

Diversity and Product Validation

Although modern day startups are striving to be more diverse, many new businesses continue to be made up of predominantly white males. Some think that this problem should be faced on a fundamental level, starting with kids. The following are suggestions for achieving this:

  • Positively introduce entrepreneurship to kids at a young age
  • Provide kids with a hands-on learning experience
  • Encourage kids to start their own business while in school

Many businesses today relate to technology, and many adults will experience self-employment at some point in their life. These facts allow for a great opportunity concerning the diversity of startup businesses. A few advantages could include:

  • Increased social health
  • Greater talent
  • More ideas
  • Improved capital

Another challenge facing startup businesses is product validation. Often, new businesses will move too quickly and forget to research the necessary conditions for an effective product and verify its profitability. To avoid this mistake, new owners should determine three things:

  • Their knowledge of the industry
  • The public's view of them and the quality of their reputation
  • Their ability to earn a profit

Market and Culture

When businesses first start off, they have the option of exploring various opportunities with different types of clients; however, at some point, companies must determine their target market and stick with it.

Once the target market is defined, startups should create a client profile and use it to determine whether or not they should accept certain clients. Sales departments should be educated concerning the questions that need to be asked when determining whether to accept or decline a new client. If the client insists on the startup's product or service, then the sales department should be aware of the specific expectations that need to be laid out and agreed upon.

Without experienced management, startup businesses often face the struggle of an undefined culture, leading to problems such as:

Limited Resources and Communication

Many startup businesses face the challenge of limited resources. Because of this, it is important that the business keep its work concentrated and intentional. In the beginning, there is a wide array of options for a business, and if the owners fail to stay focused, they will find themselves running in circles without the resources to move forward.

The importance of communication relating to startup businesses is often disregarded. Employees of new businesses often take the fast, head-down approach to their work in order to quickly tackle problems and generate a profit. However, this lack of communication creates isolated workers and departments.

On the other hand, there are some startup businesses that put too much force behind communication, particularly from the upper to lower level perspective. To provide a healthy amount of communication and to keep employees informed, businesses should be sure to communicate any type of important information throughout every level of the company.


Startups face unique challenges when they jump into a small market industry or an industry without competitors. Management and those in leadership positions must offer positive guidance to the rest of the workforce concerning the plans and ideas they use in certain limited industries. These unique strategies may cause employees to feel uncomfortable and therefore need additional encouragement and assistance.

One way management can encourage and support employees in a niche industry is by providing instruction and reviews in the following areas:

  • Organization
  • Task load
  • Effort levels

Finances and Marketing

Cash flow challenges are issues that almost every startup business faces. Cash flow troubles can cause the following problems for new businesses:

  • Product development delays
  • Inability to hire vital staff
  • Delay on opening new offices

In order to develop products, create office space, and enable marketing, startup businesses must have a sufficient amount of capital.

A mistake many startups make is devaluing the marketing and sales aspect of a product. Often, these businesses think they can rely on simple communication to announce their new product. However, to effectively spread the word, marketing and sales are needed.

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