5 Most Common Problems of Startups and Their Solutions

By Michael Zhou

Let’s face it, this is the age when startups are exploding everywhere like never before. The sheer enthusiasm being brought up by motivated entrepreneurs is certainly a force to reckon with. These individuals are leaving no opportunity go by to prove their worth in this thriving culture of innovation and technology. One thing which is conspicuously inspiring in this saga of entrepreneurship is that these people have challenged the pedigree of overarching domination of big established businesses. While many of these startups are able to make a significant presence in the world arena, others unfortunately disappear into oblivion.

“Survival of the fittest” is the adage not just relevant for humans alone; it is, in fact, quite true for startups as well. We have seen time and again that the road ahead for startups is not a smooth one. It is always important for them to execute their business idea in a way that brings value and merit to their existence. A report published in 2016 by Dow Jones VentureSource clearly suggests that billion-dollar valuation startups could thin in coming years.

This brings us to an important question: Why do startups fail in the first place? Part of the reason behind this is the high risk propositions being associated with startups where strategy adoption and execution failures act as triggers. Anyways, we will discuss in this article with a focused approach as to what are the most common problems of startups and their solutions.

Lack Of Finances

Cash flow is essential for startups to survive. One of the key challenges that small businesses face today relates to finances. As income increases, the expenditures also increase and to top it all, startups rely heavily on investors who provide them strong financial support. When such situations arrive, startups are the first ones who lose on properly managing their finances, and eventually succumb to the pressure. While entrepreneurs have to make sure that they have enough funds to go around, in the meantime, they also have to pay their employees, contractors, mortgage, and grocery bills.


As a rule of thumb, startups should always find ways of minimizing their costs. Invoice factoring is another way of speeding up the account receivable processes in startups. In this digital age when invoice payments are made through mobile phones, there is no harm to request immediate payments from clients. It is also very important to secure credit before any business needs it as they can easily find out how much cash they will likely need to survive. Finally, using accounting software to keep tab on money coming in and out of the business is also a good idea.

Poor Business Planning

Proper planning is the key for startups to get their businesses off the ground. In this technological landscape, writing a formal business plan based on a vague requirement of some institution is suicidal. Due to poor planning, many businesses fail in the very first year because they do not effectively factor in challenges and pitfalls. Even if the startups have innovative ideas and ambitions, but their business plans lack perspective, they are doomed to fail or they have to continuously devise and change them.


Before launching the business, it is important for startups to carry out a thorough research by investigating from suppliers to taxes to competitor prices. This approach is the bedrock for a successful business, which needs to be viewed in holistic way so that vision for the product is aligned with the identified target audience. Writing effective SBA business plan helps startups to define what their business is, the market it serves, how it will conduct operations, and the money it will make and spend.

Lack Of Proper Marketing Strategy

It is always a challenge for startups to figure out best ways to market their products or services. The fact that small businesses need to maximize their return on investment with efficient and result oriented targeted marketing also makes them vulnerable in terms of trust they have develop vis-à-vis customers. Without putting a comprehensive marketing strategy in place, companies’ profits take a steep plunge.


Today’s digital technology has opened a broad spectrum of avenues for marketing in the form of electronic, print, online, mobile, and video advertising. Startups more than ever need to be adept at creating innovative marketing plans, placing advertisements, and letting people know the worth of their products or services. To put it simply, a good marketing strategy has vision, mission, and business goals. It should be able to explain the position and role of a business’s products or services in the market. Proper marketing strategy fundamentally entails efficiency with which customers are approached and encouraged their future loyalty towards the product or service. Technology giant Apple Inc. is successful because of its unique marketing strategy that makes its products user friendly and highly intuitive. Steve Jobs had the vision that people will not use Apple’s products, they will experience them.

Lack Of A Dedicated Team

Due to the lack of a proper team, any business will suffer immensely. Lack of commitment aggravates frustration in the organization which quickly escalates into an open conflict. If the team members start making under commitments due to the fear of being responsible or blamed for failure, businesses will never achieve their goals.


A dedicated team with a diverse skill set is very important for the startups to grow and succeed. There should be a proper synergy, coordination, and communication among the members of a team. Any team is formed by the individuals who have different range of capabilities with identical focus. This arrangement allows the members to help each other, learn from each other, and put a concerted effort in order to achieve success. Diversity and dedication of a team drives innovation.

Fierce Competition

Competition is the most inevitable challenge that startups face. In fact, startups have to bear the brunt of facing two-way challenge: one coming from monopolistic businesses that have dominated the market and making difficult for newcomers to emerge. Second, there are countless startups that are launched regularly in the market having innovative ideas, so it is highly likely to get swallowed by the shadow of other startups.


The good thing of competition is that it forces the businesses to come out with the best. There is, in fact, a whole gamut of opportunities exist for entrepreneurs because switching costs for most customers are low and many are willing to try new, relatively untested products or services. To overcome competition, startups should research and analyze their niche industry; should be unique and different in approach; and should be able to create, implement, and track their business and marketing plan.

The challenges and problems are inevitable as far as the success journey of a startup is concerned. They need to be resilient and focused towards keeping their values intact no matter what the circumstances are. It is, therefore, to anticipate difficulties and pitfalls beforehand.

Michael Zhou Senior is the VP of Business Intelligence Development. He is also currently contributor of The General Post.