7 Biggest Challenges Engineering Startups Face When Building a Team

23rd Sep 2019
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Startups are the next big thing. However, research shows that nearly 70% of startups scale up too early, increasing their risk of failure. In fact, 9 out of 10 startups (90%) fail. Such a scary figure, huh?


In the language of business, failure is a common term. Many companies that are successful today have their own share of failure. Learning about some of the biggest challenges that most founders face when building a team is a great starting point towards a successful engineering startup.

Creating a Business Process

For a team to work smoothly, efficiently, and productively, there needs to be a process. Whether it’s about escalating issues, adding product features, solving business problems, getting feedback from customers, or allocating funds, streamlined procedures need to be put in black and white. Developing business processes is done in the early days of a startup. It is a tedious, time-consuming task and without a strategic plan in place, it can slow your team down. A great way to address this problem is to hold regular meetings with stakeholders and create a playbook of the steps needed to complete it. As more projects are completed, more procedures or processes are created. Additionally, whenever there is a new process, it has to be communicated to the rest of the team.

Finding the Right People

Engineering founders know that their success depends largely on their team. Thus, hiring the right people is one of the most critical steps in building a startup. Delays in hiring the right personnel do not only eat up time but also causes a delay in product development. Building your startup team from scratch is not easy. But it can be done. Experts recommend the following strategies:


  • Figure out what you really need and what you can offer to the right talent.
  • Understand the qualities you require from your personnel.
  • Create an attractive yet realistic employee benefits program.

Funding the Startup

Nearly every startup struggles with finances. Cash flow issues can delay the rollout of products or services. It can prevent founders from making the necessary steps to grow their business, from hiring staff to purchasing tools and equipment, conducting marketing, and investing in technology that can streamline their processes. Fortunately, there are plenty of reliable ways like personal loans online for fair credit. You can also negotiate with customers (e.g. royalty payments) to complete your development, solicit venture capital investors, apply to local angel investor groups, request a small business grant, or start a crowdfunding campaign. 

Scaling Up

One great thing about startups is that since they are small companies, scaling up is easy. But there are also challenges associated with this. As your business experiences growth and your products or services become more in demand, there’s always an urgent need to scale up to handle the growth. Otherwise, you could miss out on big opportunities. Scaling up may involve hiring more people, moving to larger office space, tapping a new market, etc. All these are not only labor-intensive. They also require a significant amount of money. Careful planning is critical in order to keep up with the speedy growth of your business.

Getting Enough Skill Sets 

Founder-engineers may have the skills and knowledge to create amazing tech products. There’s no doubt about it. But they could be lacking skills in operating a business, responding to customers, seeking investors, and so on. A successful startup is comprised of a myriad of skill sets. Product expertise is not enough to succeed. It is important to find the right people to fill in the critical roles necessary to run a company and make it successful. Understanding your business management strategy is the key starting point in addressing your needs for skill sets. Engineering startups need to identify the roles needed, from product developers to software designers, data scientists, marketing specialists, and even content managers.

Role Distribution

As the startup scales up and gets bigger, so as the team. And as the team expands, roles get more complex, and the demand for skill sets increases. Role distribution is crucial to the smooth implementation of projects. It is not uncommon for team members to have multiple roles, especially if the startup does not have enough capacity. However, without the proper distribution of roles, members may not have enough skills and knowledge to perform specific tasks. Hiring new staff, especially for short-term projects, may not be viable. But if specialized skills are needed, it might make better sense.

Lack of a Common Goal

It is not enough that employees know their roles. It is also very important for everyone in an engineering startup to understand the long-term goals of their organization. Knowing about the company's vision and mission gives your team a sense of direction and an opportunity to make a significant contribution to your business.

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Ana-Maria Sanders

Ana-Maria Sanders is a content writer and marketing manager at LoanStart.com. In her current role, she is responsible for managing the finance and operations of securities. Expect from all these, she loves writing blogs on various topics to give insights for managing finances and loans. 

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