The Most Common Startup Business Challenges

Solution: Validate Before Scaling

We can all agree that skipping key steps like user research and UX testing rarely leads to a successful product. The same goes for skipping the creation of an MVP. An MVP is a crucial step in reducing the risk of failure. Let’s be clear—having an MVP doesn’t guarantee success, but it does provide a valuable opportunity to test your ideas early on and see if they’re worth further investment of time, money, and energy.

By putting your concept into the hands of real business users, you gain insights that go beyond assumptions, helping you refine your product and make smarter decisions. Whether the feedback validates your idea or points you in a new direction, the experience of building and testing an MVP is invaluable. It not only strengthens your product but also helps you grow as an entrepreneur, giving you the clarity to move forward with confidence.

#2 Customer Acquisition and Retention

Skipping investment in marketing and sales is a mistake many startups make, thinking they can rely on word-of-mouth or organic growth alone. Don’t get it wrong, putting resources into these areas doesn’t guarantee immediate success, but it does significantly increase your chances of building a strong customer base (which in fact is one of the biggest startup business challenges) and driving sustainable growth.

Solution: Build a Strong Marketing and Sales Foundation

To solve problems of startups connected with effective marketing and sales, you can follow these steps:

• Start with a Clear Customer Profile

Identify and understand your target audience. Who are your potential customers? What problems do they face? What motivates them? This will ensure your marketing and sales efforts are focused on the right people.

• Leverage Content Marketing

Create valuable content like blog posts, videos, or social media updates. That speaks to your audience’s needs and positions your product as a solution. It’s a cost-effective way to build credibility and engage your audience.

• Use Social Media Strategically

Don’t just post for the sake of posting. Use platforms like LinkedIn, Instagram, or Twitter to engage with your audience, share relevant content, and build relationships. Running small, targeted ads can also help you get noticed by the right people.

• Implement an Email Marketing Strategy

Build an email list early and nurture your audience with regular, personalized updates. Email marketing remains one of the most effective channels for converting prospects into paying customers.

• Develop a Sales Funnel

Map out your sales process from lead generation to closing the deal. Use tools like CRM software (e.g., HubSpot, Salesforce) to manage leads, track interactions, and ensure timely follow-ups.

• Focus on Customer Retention

Sales don’t end after a purchase. Keep customers engaged with excellent service, loyalty programs, and regular updates.

#3 Financial Management and Funding Challenges

Many inspired but inexperienced founders don’t seriously consider the cost of starting the business. This lack of preparation often leads to cash flow issues, unforeseen expenses, and even insolvency.

The stakes are high because your ability to navigate these financial hurdles often determines your startup’s survival. Running out of money too soon is a common reason startups fail, and ironically, cutting corners in the early days can hurt your chances of building momentum when it’s needed most. 

To top it off, staying compliant with regulations, like adopting anti-money laundering solutions, isn’t optional if you want to build trust with investors and stay on the right side of the law. A strong financial foundation is non-negotiable—your startup depends on it.

Solution: Financial Management and Securing Funding

• Start with a Lean Budget

Focus on essential expenses and avoid over-investing in non-critical areas, such as luxury office spaces or advanced tools you don’t need yet.

• Use Financial Tools

Use platforms like QuickBooks, Xero, or Wave to track expenses and cash flow in real-time. These tools can help you monitor your financial health and avoid surprises.

• Build a Buffer

Allocate at least 10–20% of your budget as a contingency fund for unexpected costs. This safety net can make all the difference in a crisis.

• Keep Personal and Business Finances Separate

Open a dedicated business bank account to ensure clarity and prevent commingling funds, which can complicate tax reporting and investor scrutiny.

• Choose Funding Wisely

Research funding options that align with your startup stage. For example:

#4 In-House Team Only

In-house is nice, for sure. You’re working all in the same office, hopefully, united by your company culture and huge willingness to make it a successful business. What’s more, management has full control of the ongoing processes and any issue can be resolved at the reach of the hand.

Yes, but.

• If you’re hiring in a specific tech stack and domain, there might be a lack of candidates.
• Searching for the right candidate and recruitment can take up to a few months.
• If your company is located in the USA, UK, Canada, or other “tech-expensive" countries, it will be a big check.
• Add expenses for vacations, insurance, social packages, hardware, software, etc.
• Paying for downtime.

Solution: Startups can Outsource

Some time ago, hiring an outsourced team was considered a huge risk. Today, businesses are no longer limited by geographical borders, they can hire everywhere, saving costs, and time for recruitment, and most importantly, they get the best talent in the required niche.

Outsourcing is much cheaper than hiring an in-house team, not just because of savings on salaries but also on expenses like office space, equipment, insurance, and employee benefits.

Labor costs vary significantly by country. For example, the average annual salary for a .NET developer in the U.S. is about $98k, while in Ukraine, it’s around $36k, according to Indeed.

Besides cost-saving which is one of the biggest startup problems, outsourcing brings a lot of other benefits.

#5 Managing Technical Debt

One of the major startup business challenges is technical debt—a common byproduct of rapid development. Technical debt arises when teams prioritize speed over perfection, implementing solutions that work for now but require rework later. While manageable in the short term, ignoring technical debt can severely hinder growth and scalability. 

According to McKinsey, companies allocate about 20% of their budgets to addressing issues caused by technical debt.

Solution: Systematically Managing a Technical Debt

To overcome such problems in startups, companies should adopt a proactive approach by systematically managing technical debt from the outset. This includes setting time aside for code reviews, refactoring, and scalability testing. By balancing immediate deliverables with future-proofing their codebase, startups can avoid the snowball effect of neglected debt while keeping projects efficient and costs under control.

#6 Regulatory Compliance

Another of the startup company challenges is dealing with compliance.

Startups often dive into industries like healthcare, fintech, or e-commerce without fully understanding the regulatory hurdles they’ll face. Non-compliance can lead to hefty fines, reputational damage, or even shutting down operations entirely. Startups are especially vulnerable because they may have limited resources to navigate complex legal frameworks.

Solution: Prioritize Compliance

Compliance doesn’t have to be a nightmare if you approach it early. Start by consulting legal experts in your field to identify the key regulations that apply to your business. Implement compliance measures as part of your product development process, this is especially critical for areas like data privacy or payment systems.

A great example is how many fintech startups integrate third-party security and compliance platforms to handle sensitive data while staying ahead of evolving regulations. Being proactive not only minimizes startup company challenges and risks but can also build trust with your customers, giving you a competitive edge.

#7 Scaling the Business

Scaling a startup isn’t just about getting more customers, it’s about maintaining quality and efficiency while growing. When you scale too quickly, you risk overburdening your team, facing operational bottlenecks, and losing the personal touch that sets your business apart. Plus, without scalable infrastructure, growth can lead to chaos rather than success.

Solution: Invest in Scalable Systems Early On

The key to effective dealing with scaling startup challenges is preparation. Start by streamlining processes early: invest in tools and systems that can handle higher volumes without breaking. For example, automation software for customer support or scalable cloud infrastructure can make a huge difference.

Equally important is hiring strategically: don’t just fill seats, bring in people who can adapt and contribute as your startup evolves. Finally, keep an eye on customer feedback during growth spurts to ensure quality and user satisfaction remain top priorities.

Overcome Startup Challenges with inVerita

The bitter truth is that the majority of startups fail but those that succeed often do so by leveraging smart strategies, including outsourcing to optimize resources and scale efficiently. 

At inVerita, we’ve built strong partnerships with companies across various industries and regions, helping them turn ideas into thriving products.

Recognized as one of the best B2B vendors on Clutch, we offer top-tier service quality, regular updates, and a ramp-up time of just 30 days to get your project moving quickly.