11 Startup Challenges To Consider When Starting a Business

If all you needed for entrepreneurial success was a great idea, anyone could start a new business.

In reality, a great new business idea is just one of many factors that go toward a startup’s success. Your real-world entrepreneurial journey will take you through many stages—from raising money and hiring employees to marketing, sales, and financial management. And that journey likely won’t be linear or without its challenges.

Tapping the wisdom of fellow business owners can help. They’ve seen it all, from securing funding in the early stages to entering new markets with novel products and services. Here are some of their most valuable insights, plus an overview of challenges when starting your own business from scratch.

11 challenges startups face

1. Accessing capital
2. Finding the right suppliers
3. Standing out amidst competition
4. Acquiring customers efficiently
5. Securing retail partners
6. Retaining customers
7. Hiring and retaining talent
8. Getting pricing rights
9. Managing cash flow
10. Working through technical issues
11. Staying up to date with legal requirements

Even the most talented founders have to navigate challenges when starting a business. Here are some common issues to anticipate when building a startup:

1. Accessing capital

Few things are more important for small business success than securing enough funding to cover your costs. You may have brilliant new ideas and clever sales strategies, but if you lack access to capital, you may never bring your new venture to market.

So what can you do to raise money? Self-funding, known as bootstrapping, lets you retain full ownership of your business, but this can require taking on debt or dipping into personal savings that many new entrepreneurs simply don’t have. To overcome these barriers, some founders explore crowdfunding platforms like Kickstarter or GoFundMe or decide to take out a business loan. Shopify merchants can use Shopify Capital, which lets you pay back your loan as a percentage of your Shopify sales.

Other founders seek equity financing, which entails selling an ownership stake in the company to outside investors like venture capital firms. This approach requires perseverance. For their first big fundraising round, Three Ships Beauty founders Connie Lo and Laura Thompson spent nearly 12 hours per day on investor calls—which often involved rejection. “Every time someone would say no, we would ask for an intro to somebody else that might be interested,” Laura says on an episode of Shopify Masters. “If they said yes, we would also ask for an intro to somebody else in the network that might be interested.”

The pair found that keeping their ask concrete and time-bound helped them get firm commitments. “We set the terms,” Laura says. “We set the valuation, we set the minimum check size, and we also set a really, really firm close date. I think you need to set a close date to light some sort of urgency underneath investors. You need to give some sort of sense of FOMO. Investors are very emotionally driven compared to what you would think.”

2. Finding the right suppliers

An ecommerce startup’s success hinges on finding reliable suppliers, manufacturers, and distributors. If you find a good partner, there are many benefits: mutual trust, a similar level of competence, and shared interest in success are among the most important. Still, if any of these partners turns out to be unreliable, you can expect delays, poor quality, and customer dissatisfaction.

To minimize your exposure to such issues, use B2B (business to business) marketplaces like Alibaba, attend industry trade shows, and leverage the Shopify Partners Directory to find the right vendors for your specific needs. Vet any prospective suppliers through sample orders and reviews, and develop relationships with multiple suppliers in case one doesn’t work out. If your first choice doesn’t come through, you will be grateful to have a reliable backup ready to go.

“I sampled over a hundred samples from over 150 vendors, and it took me a while to understand what to look for,” Glamnetic founder Ann McFerran recalls on the Shopify Masters podcast. “Finally, maybe two created the right sample that I was looking for. I just go with the method of ’They need me more than I need them’ because I have so many more vendors to choose from. They want my business.”

3. Standing out amidst competition

Even if you have a great business concept, it can be tough to differentiate your startup in a crowded ecommerce market. Founders often underestimate how hard other entrepreneurs are hustling to reach the same limited pool of potential customers.

As a founder, it’s your job to develop a clear brand positioning strategy by offering a unique value proposition (UVP) to your target audience. You also need to craft a memorable brand identity. Use visual design tools like Canva and 99designs, plus brand asset management tools like Brandfolder, to create and manage intellectual property that sets your company apart.

4. Acquiring customers efficiently 

Even with a great product, ineffective marketing can slow your growth. Savvy business owners know you need a multichannel approach, meaning you’re on social media, building an email list, spending on paid ads, and possibly even doing events. But the challenge is determining which channels are actually working to bring customers to your business. 

The key is understanding each channel’s role in the customer journey—and using data to ensure your marketing spend drives real growth instead of guesswork. As Dan Gray, CEO of Vendry, explains, “The biggest challenge with multichannel marketing, especially at scale, is attribution and identifying which channel is actually driving impact in order to put more budget and energy toward it.” 

This is where marketing attribution comes in. No attribution methodology is perfect, but with a solid framework and supporting software, you can measure the efficiency of your channels.

5. Securing retail partners

For some brands, landing retail partners—especially prestigious ones—can make or break the business. But getting into top-tier retailers doesn’t happen overnight. It requires persistence, relationship-building, and strategic outreach.

Original Duckhead, a sustainable, design-forward umbrella brand, learned this firsthand as it sought placement in world-class destinations like New York’s Museum of Modern Art. 

“It’s really important to not be afraid to just call and email,” says founder Morgan Cros on an episode of Shopify Masters. She notes that her team typically expects eight to 10 touchpoints before a retailer commits. “That’s what I like to tell my team so that they don’t get discouraged,” she says. “Like, OK, you’ve only reached out five times. You’ve still got to keep going.”

Securing retail partnerships is less about a single perfect pitch and more about consistent follow-up, demonstrating value, and proving that your product belongs on their shelves. The right retailers will elevate your brand, but you’ll often need to show persistence before they say yes.

6. Retaining customers

Customer retention is what drives up the lifetime value of your customers, and moving this metric can transform the economics of your business. But retention isn’t easy; it requires an excellent customer experience and constant effort to keep customers engaged with your brand. Some brands focus on retention just as much as they focus on acquisition.

Many businesses go a step further by establishing loyalty programs and sending personalized emails to retarget existing customers, offering them customized discounts based on their purchase histories. For example, the pet food company The Honest Kitchen had a customer loyalty program in place, but no way for existing customers to redeem points on subscription orders. So it started using Yotpo to deliver personalized educational content and automatically populate a rewards page based on each customer’s previous purchases.

Soon after implementation, opt-in rates for The Honest Kitchen’s referral program rose to four times the industry average. “I’ve definitely seen customers who are inclined to explore new products, because there’s less of a risk if they’re using reward points,” says Leanne Pratt, The Honest Kitchen’s digital marketing and ecommerce manager.

Think about leveraging chatbots and FAQ pages on your website to provide 24/7 support if your business receives frequent inquiries or operates across different time zones. These tools reduce response times, resolve simple issues automatically, and free your team to focus on higher-value conversations with customers who need more attention.

7. Hiring and retaining talent

There will likely come a point when you find that you can’t do everything yourself and need to start hiring people. However, if you start with the wrong people in key roles, that can stymie growth. Some startups never bridge this skills gap challenge, leading to premature failure.

Gaby Bayona, founder of the bridal fashion brand Truvelle, found that the best approach for her business was to be hands-on in the initial stages of building out her team. Because she had done every task personally, she was better equipped to train people and know what to look for in a new hire.

“I did everything myself. I sewed everything. I did the sales, I did the shipping, quality control, and cutting of the garment,” Gaby says on an episode of Shopify Masters. “And I’m really glad that I did because I think that if I had needed to figure things out with people around me, it would’ve been more difficult. When I did hire a team, I was able to say, ‘This is how you cut something. This is how you sew something. This is how you ship something. This is how you sell something.’ Which made the process of growing my business a lot easier because it all came from firsthand experience.”

In addition to hiring for technical skills, look for people who are team players, good at managing time, and who show a passion for your industry. Some companies set up mentorship programs to pair new employees with seasoned team members, helping them integrate into their job and the company culture. To compete with similar businesses and attract star performers, consider offering equity or performance bonuses.

8. Getting pricing right

Pricing is one of the trickiest decisions a startup makes. Set your price too high, and you risk scaring away potential customers. But set it too low, and you undermine your margins or signal that your product lacks value. Price optimization is all about finding that sweet spot.

Claudia Snoh, cofounder of premium coffee concentrate brand Kloo, used the brand’s soft launch to test out the pricing strategy. “We conducted a massive survey where a lot of people said their biggest roadblock was the price per bottle,” she explains on an episode of the Shopify Masters podcast. So, Kloo lowered the price of a bottle from $35 to $32 and offered a discount for bulk purchases. “We were able to really satisfy our customers’ needs … and now we’re also seeing that we have a much, much higher conversion rate as well,” Claudia says.

9. Managing cash flow

Poor financial planning and limited financial knowledge make it hard to track how much cash is actually available day to day. You might generate strong sales and even show profit on paper, but if you tie up too much money in slow-moving inventory, unpaid invoices, or high overhead costs, you can run out of cash before you even pay suppliers or employees. This mismatch between the timing of cash in versus cash out can cripple growth and create serious operational stress.

To prevent this, founders need systems—not guesswork. Using small business accounting tools like QuickBooks or Xero helps you track cash flow in real time, monitor receivables and payables, and spot problems before they snowball. If you don’t have the financial expertise to build budgets, read cash flow statements, or manage accrual versus cash basis accounting, outsourcing to a fractional chief financial officer (CFO) or bookkeeper is often cheaper than fixing avoidable mistakes later. 

With healthy cash flow, you can reinvest in inventory, cover expenses during seasonal dips, and capitalize on new opportunities without relying on expensive emergency funding. 

10. Working through technical issues

Website crashes, slow page loading speeds, and insecure payment gateways can severely damage a fledgling business’s reputation and sales. For example, when the legendary sock company Bombas got attention from a Shark Tank appearance, its online store fell apart. The cofounders watched in horror as product images broke, checkout flows failed, and thousands of dollars of losses racked up. “Even worse, I wasn’t one bit surprised,” cofounder David Heath says. “We were getting major press, and our site couldn’t scale on demand like we needed it to.” 

Bombas migrated its website to Shopify and saw a positive return on investment almost immediately. In its first year with Shopify, Bombas was able to save $108,000 in platform costs and expand the business, helping the company’s mission to donate socks to those in need. 

If you’re in ecommerce, partner with a reliable and scalable platform like Shopify that handles technical infrastructure. Use robust apps and plug-ins from the Shopify App Store to ensure a seamless and secure customer experience.

11. Staying up to date with legal requirements

Legal tasks like business registration, licenses, trademarks, taxes, and contracts can stack up quickly, overwhelming even the most organized entrepreneur. However, founders who invest the time to understand the legal landscape—and plan for it early—gain a massive competitive advantage over those who play catch-up later.

As Catherine Carter, cofounder of The Sip, put it on an episode of Shopify Masters, “Take your time and get your ducks in a row. Don’t try to rush that process, or you’ll spend a lot of time on the back end trying to correct it later.” Block time to register your business properly, secure necessary licenses, protect your intellectual property with trademarks, and set up clear contracts with partners and vendors before you launch. 

*All loans through Shopify Capital Loans are issued by WebBank. Offers are subject to change based on several factors including your store's performance and the review of your financial information. Shopify Capital Loans must be paid in full within 18 months, and two minimum payments apply within the first two six-month periods. Offers to apply do not guarantee funding. Repayments are made based on a percentage of daily sales.