What are 4 Challenges Startups Face? – Part I


Startup companies face numerous challenges. Every entrepreneur begins their journey with the hopes becoming the next “unicorn.” Regrettably, the overwhelming likelihood is that the startup will fail within a couple of years from inception rather than becoming a privately-held company valued at $1 billion or more in assets.  Notwithstanding the long odds, entrepreneurs should be prepared for and face these challenges head-on. Having an understanding of what challenges lie ahead and planning to overcome those obstacles gives the startup a fighting chance. Having counsel from knowledgeable and dedicated startup company attorneys can help.  The Silicon Valley business lawyers at Startup Company Counsel have the experience and understanding to lead startups on the road to profitability and advise entrepreneurs how to avoid challenges.  There are many different challenges that a startup company faces: funding, creative destruction, innovation, and hiring are only few.

  • Funding

Funding, or more specifically, lack of available funding, is one of the biggest challenges when starting a company. Most startups require a form of investment not only to start a company, but keep it going. Many lending institutions such as banks and credit unions are cautious with their lending. Comparably, only a handful of startups can expect help from angel investors instead of traditional lending sources. Often, entrepreneurs avoid seeking legal advice in the early stages of a startup company because they are trying to avoid spending money.  This can be very detrimental and very costly to the startup in the long run. While there are many avenues to explore in order to gain seed financing, having the advice from a qualified startup company attorney can make the process much simpler and directed to best suit the company.

  • Creative Destruction

Startups potentially face insurmountable challenges if they are unable, or unwilling, to change courses if the original plan or idea is not working.  Creative destruction and flexibility are key.  Startups require leaders with dogged determination to take an idea from drawing board to completion to profitability. In addition, leaders need to demonstrate an ability to reevaluate business strategies. Refusing to be flexible can cause the startup to head down a road from which there is no recovery.  Leaders displaying dedication and determination, coupled with the ability to learn and reassess, will help the startup successfully grow.

  • Innovation

Innovation is a necessary factor when adding value to a company.  Markets rapidly change as do new technologies. A startup company cannot rest upon its initial investments and achievements; but rather, it must continue to grow and adapt.  The startup should strike a delicate balance between innovating for the sake of innovation and addressing its customer’s needs.  Chasing the next best innovation can cause a startup to fail if it does not remain true to its mission.

  • Hiring Employees

A business owner needs competent, trustworthy employees on the journey to profitability and this starts with hiring the right talent to make their business a success.  The startup company mentality may not be ideal for every potential hire.  Startups must make certain that hires fit the culture, mood, and vision of the company.  Hiring employees can be daunting, especially if the startup is rapidly expanding.  Rapid hiring puts a strain on resources and stress to existing employees so it is key to approach the process with finess. Additionally, management, must spend time finding suitable candidates then dedicate the necessary resources to vet the candidates.  After, the company must allocate sufficient funds for salary and benefits.  Furthermore, the startup must make certain they have the employment contracts in place to retain talent, but also restrain them from committing acts detrimental to the wellbeing of the company.

Silicon Valley Startup Company Counsel Can Help

Starting a new business is exciting, and the challenge is exhilarating for entrepreneurs.  People considering starting a business in California should consult with attorneys experienced in helping entrepreneurs reach their goals. The startup lawyers from Startup Company Counsel are seasoned business attorneys who have helped numerous clients face the many challenges startup companies face.  Call Silicon Valley’s Startup Company Counsel today at 408-441-7555 or email us to learn how we can lead you and your startup on the road to success and avoid damning challenges.

Share this post:

Leave Your Comment

Your email address will not be published. Required fields are marked *

Related Posts


Generic selectors
Exact matches only
Search in title
Search in content

Quick Glossary

Contact Us