Five Problems You’ll Encounter Building a Startup

Five Problems You’ll Encounter Building a Startup

So, you want to start a business? Congratulations! Starting a business is a fantastic accomplishment that can bring you both wealth and satisfaction. However, it’s not all rainbows and butterflies. You’re likely to face several challenges as a startup owner, especially for small businesses.

Many small businesses are not fated for success. About 20 percent of small businesses fail in their first year, and about 50 percent fail within five years. It’s primarily because of problems that happen to the company. Here are five of the most common ones:

Finding the right team

Finding the right team to help you achieve your goals is one of the most challenging tasks for a startup owner. It can be tempting to try and do everything yourself, but that’s not sustainable in the long run. Moreover, they are costly, costing almost 80% of your startup costs.

You need to find people who share your vision and are willing to work hard to make your dream a reality. The good news is that there are several things you can do to let this happen. Here are your options.

Get Help From an Agency

Recruitment agencies are a great way to find top talent. They can help you identify potential candidates and provide access to a pool of pre-screened and qualified individuals.

The downside is that agencies can be expensive, so this may not be an option for everyone.

Work With a Freelancer

Working with a freelancer can be a great way to get the help you need without breaking the bank if you’re on a tight budget.

Several websites, such as Upwork and Fiverr, connect businesses with freelancers who can do everything from writing articles to creating logos.

Remember that since you’re working with someone you don’t employ, there’s always the risk that they may not be as reliable or committed as you’d like.

A business owner holding a jar of money

Securing funding

Another big challenge for startups is securing funding. Unless you have deep pockets or investors lined up, you’ll likely have to get creative when it comes to financing your business. Here are some options you have when securing funding:

Angel Investors

Angel investors are individuals who invest in startups in exchange for equity. They typically provide smaller investments than venture capitalists, but they can be a great way to get the funding you need to get your business off the ground.


Crowdfunding is another option you have for securing funding. With crowdfunding, you solicit small donations from a large group of people, typically through an online platform.

The upside of crowdfunding is that it’s a relatively quick and easy way to raise money. The downside is that you may not be able to raise as much money as you need.


Bootstrapping means funding your business yourself, either with savings or by generating revenue through customers. It’s one of the best ways to fund a second business, but it can be challenging to do for startups.

One of the advantages of bootstrapping is that you don’t have to give up equity in your company. However, funding all aspects of your business can be challenging without outside help.

Managing cash flow

Cash flow management is critical for any business but can be especially challenging for startups. Since you’re just off the ground, you won’t have much revenue coming in at first. That’s why it’s essential to create a detailed budget and track your expenses carefully. Otherwise, you could quickly find yourself in over your head financially.

Dealing with red tape

There’s no getting around it: starting a business requires dealing with a lot of bureaucracy. From filing the necessary paperwork to obtaining permits and licenses, a lot of red tape is involved in starting a business. The good news is that there are resources out there, like consultants and online guides, that can help make the process less overwhelming.


Lastly, there’s bankruptcy. There are many kinds of bankruptcy, but the two most common are the wage earner’s plan and liquidation bankruptcy. The wage earner’s plan is primarily for working people who have a regular income but are overwhelmed by debt. Liquidation bankruptcy, on the other hand, is when a business owner dissolves their company and sells off their assets to repay creditors. This is generally seen as a last resort option, but it’s essential to know that it’s an option nonetheless if you don’t want your startup to succeed.

These are just a few challenges you may encounter when starting a business. However, don’t let them discourage you! You can overcome obstacles and build a successful startup with hard work and dedication.