Back

7 SaaS Startup Software Development Challenges. Why Startups Fail

Updated: 20.10.2022

Solving Software Development challenges: why startups fail

Those who want to start building a software product often find themselves troubled by questions and doubts. Some of the doubts and questions may seem challenging but if you find someone experienced to answer them for you and advise you on what to do, you'll be surprised how easy it is to find a solution to all of your problems, doubts, and questions. In this article, we'll answer the most burning question: why startups fail.

You'll learn what are 5 SaaS Startup Software Development challenges, find answers on how to face significant challenges and how to stay clear of poor decisions. To make it easier for you to navigate your own SaaS Start up Application Development, we've asked some of the most successful businessmen to tell us about their experiences and recommendations.

The challenges that you'll face while developing your own SaaS Startup Applications will depend on your approach.

The first question you'll have to answer will be whether to develop your product by yourself and hire one software product developer for help or hire a team of software developers or an outsourced company to develop the product for you. This question takes us to the first major challenge you'll face in the software industry:

Challenge 1: Stop being a Superhero, hire software developers

Convince yourself that others can also do tasks well, although as a CEO you can be good at designing, programming, marketing, etc. - do not deal with everything, focus on building the vision and business aspects of the project, and delegate the rest to specialists. Preferably those who have experience in building MVP projects and help you build your SaaS Startup quickly and efficiently.

According to both the developers and the Startup owners, it is advisable to use the expertise of more experienced programmers in the implementation of the software projects. Why?

One of the reasons is limited time. As was mentioned in one of our other articles about Inhouse Software Development vs outsourcing, hiring an in-house developer, co-working with one or few developers, or doing everything on your own will leave you with many additional responsibilities that you won't have if you outsource.

The second reason for which you might consider hiring a team of programmers/outsourced company is their expertise. When you're working on software product development for the first time chances are that you won't even realize what mistakes you're making.

Hiring a team of experienced programmers means aiding yourself with professional help and advice. They'll steer you away from making expensive mistakes and doing things that don't scale well. Experienced software developers face significant challenges that come up during software product development quicker and steer your away from poor decisions.

As was already mentioned, hiring an experienced team to help you develop your product is very important. Once you decide whether you want to hire an in-house development team or outsource, you'll need to focus on either finding the right software developers for your company to hire (which may be tricky because you need to learn how to hire software developers first) or an experienced outsourcing software development company to work with. It's entirely up to you, however, our clients all agree that hiring an experienced team will help you avoid making mistakes and losing money.

Once you have that settled, there will be many other choices to make and problems to resolve. If you jump into developing your SaaS Startup application not knowing what common challenges await you on your journey, you may make a lot of unnecessary mistakes.

In order to make an informed decision one has to both know the threats and benefits of running it alone, and be able to recognize what is best for the business. According to our clients, some of the benefits of running alone are remaining close to the product (which is also seen as a threat by some), being able to alter your code, and making decisions on your own and without consulting anyone, which makes the whole process easier and faster. It is thought that working alone enables you to twist your ideas and change things as soon as you come up with them. It gives you a certain freedom that you won't have if you outsource. However, this freedom is what ultimately can turn into the downfall of your projects.

It is notable that according to experienced entrepreneurs, there are more threats than benefits to running the project by yourself. Remaining close to the product and having this freedom, that we've just talked about, is often seen as just as dangerous, or even more dangerous than beneficial. Depending on your own skillset and performance definitely takes a lot of courage and belief in oneself and for some, it might be the best course of action.

Although, when you have no other input and no one to advise you, it's easier to make costly errors and mistakes. Often, when we create something, we feel strongly about it, we don't see the flaws of our own creations, which can lead to disaster if there's no one to point them out for us. As was already stated, listening to the expertise of other professionals often plays a huge role in achieving success.

We know now what are some of the greatest threats and benefits that you'd have to be aware of if you wanted to run your project on your own or with the help of one programmer. Running a project by yourself is a challenge in itself, which makes knowing these threats even more crucial for your success. It's easy to lose money on bad decisions and it's not always our fault, but having an experienced team to advise you and steer you away from additional costs and expensive errors, can save you from failing. And if you fail anyway? Here are some tips from Start up owners on challenges faced by their Start ups:

[When you're running your project by yourself] All your time goes into things that are not related to making the project grow. A founder should never spend 3hrs fixing a stupid bug -> she/he should be growing the business

No sense check: When you work with other devs, they (hopefully) inform you if you're doing something stupid.”

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


“Biggest benefit [of working with some experienced team members] is that you can very quickly pivot your idea as you see it taking shape. The threat is that you end up being the only one who knows the code, and then bringing new people in later when it's needed gets much more difficult.”

David Wender

David Wender

Founder of WhenPlace/in10, WhenTech


"Many times, you are your worst enemy. In fact, I think my greatest strength as an entrepreneur is knowing when to get out of the way.

…You need to depend on a team, and I'm not talking about 10+ people. I think 3 people are perfect. Basically, a program manager and two developers. The three of them, much like a three-legged stool, make sure the project is balanced. If they disagree with what you are doing, chances are they are very much right and the stool (your business!) will fall over and fail!”

Jon Biedermann

Jon Biedermann

Founder/CEO/President of SimplyFundraisingCRM


“Startup founders should be focusing on the stuff that no one else can do.”

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


“Outsourcing to a software house allows you to fail fast. You can develop and launch your MVP, if the traction or market interest is not what you expect you can move on quickly. You haven't wasted time hiring a developer and you don't have to spend extra time and money making them redundant.”

Ed Ireson

Ed Ireson

Co Founder of Jog.ai


“It is so much faster with an experienced partner than with a newbie team.”

Ali_Omar

Ali Omar

Lead Scientist and Chief of Product at Project Caleido


“I started off programming myself, but I am not an expert, so while I was able to quickly build what I wanted to create, I made many mistakes that made things much more difficult later. Also, programming takes up a lot of time. I would have been better off focusing on growing and running the business than programming.”

David Wender

David Wender

Founder of WhenPlace/in10, WhenTech


“Great things in business are never done by one person; they’re done by a team of people.”

Steve Jobs

Steve Jobs


“Many startup CTOs are not that experienced. Hire people who know more than you!”

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


Challenge 2: Don't build stuff that nobody wants

We want to have everything done all at once. We come up with many different features even before the project starts, and then during the software development process, we find even more solutions based on testing and customers' needs. Adjusting your product to meet customers' needs is a good thing, however, it's worth remembering that not everything has to be done in that first stage of software development. It is instead recommended to focus on developing enough features to publish the app and have some customers invest in it first. That way you won't drain your wallet and it will also allow you to see, yet again, what is needed the most, what works for your customers and what doesn't. Introducing updates to your application after its release is believed to be more profitable than duplicating efforts to perfect it during its development phase because while you're working on the updates, your application is already making money. It allows your business to thrive.

It is advisable to not lose your focus on what's important in your app, and to not let yourself be distracted by constant changes and new additions before its initial release, however, it doesn't mean that you should release an unfinished or badly made app that's full of errors. It's true that you don't have to add each and every feature to your app before its release and that you don't have to strive for perfection. It's also true that errors and mistakes are unavoidable. However, you can and you should make sure that your app is well tested and that there are little to no bugs in it before releasing it. You don't want users getting discouraged or disappointed with what you're giving them. If you release an app that doesn't meet their needs, that is so bugged it's hard or impossible to use, you'll lose customers.

We all know that testing your product internally is important. But what some people do not realize is that letting your potential customers test your product is just as crucial. If you test how your customers respond to your product, what they like and what they don't like about it, you'll know if it is going to sell or not. And if the answer will be negative, you'll still have some time to fix the issues, introduce changes to the design, etc., and make sure to fulfill your customers' needs. Chances are you'll still have room for improvement after your application is out, but if you do your research before and check what it is that your potential customers want, you'll avoid bigger mistakes and won't lose so many users at the very beginning.

“1) think, plan, do interviews and test your product idea 6-12 mo before starting software development 2) create extremely detailed specifications. This helps you to identify scenarios that you did not know at first. The better the specs the faster the software development. 3) learn on the fly to prioritize and cut unnecessary features. Concentrate on client value.”

Ali_Omar

Ali Omar

Lead Scientist and Chief of Product at Project Caleido


"You are a startup founder, you need to deploy your MVP as quickly as possible and be wearing our shoe leather having conversations with your customers and understanding the market.”

Ed Ireson

Ed Ireson

Co Founder of Jog.ai


“As the product owners/entrepreneurs, we tend to always know what 'needs' to be developed, or certain features that we 'must-have. You need to listen to your team, and also make sure that what you want in the product is the same as what the customer wants. While I was successful in my recent startup, I did have two major features developed that cost time and money and distracted us. Worst of all, the client that 'demanded' them, didn't even end up using it! So you have to be careful about saying 'yes' and saying 'no' more often.”

Jon Biedermann

Jon Biedermann

Founder/CEO/President of SimplyFundraisingCRM


“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

Steve Jobs

Steve Jobs


“There will always be errors/mistakes. You need to accept that this will happen and be prepared to deal with it.”

David Wender

David Wender

Founder of WhenPlace/in10, WhenTech


“Number 1 mistake made by most startups: Building stuff that nobody wants. The first thing you should do is find out *really* what the market/your customers want.”

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


“Wonder what your customer really wants? Ask. Don’t tell.”

Stone-Lisa2

Lisa Stone

Co Founder and CEO BlogHer


“Keep your focus. You need to develop the minimum number of features that can get you your first customers. Then, have your pipeline of desired features ready. Conversations with your customers and prospects will tell you which features are important and which ones you can leave in the backlog.”

Ed Ireson

Ed Ireson

Co Founder of Jog.ai


Challenge 3: Don't be an idealist

Not to be an idealist who must have a very complex product stuffed with tons of features before he shows his product to the world

As was already mentioned, introducing a lot of changes and features to your product before its release is not advisable and it's a common software development challenge as well. It may, however, be tempting, especially if you're an idealist who wants to create a perfect product that will fulfill all of the needs of your customers. You don't need your product to scale to a million users right after its release - what you do need, however, is a product that is released and usable. A product that will get you your first customers and allow you to introduce new features. It is crucial to always have your MVP on your mind. Your MVP needs to be simple and has to be deployed as quickly as possible. You need your product to do its basic job, to solve a problem for the client, and get them to use the app - that's the most important thing. The rest can wait.

There's this belief in the industry that some features are the “must-have”, features that make your product whole, make it usable and important, and then there are features “nice have”, which would make your app even better, add to its brilliance, but that is not needed at that first stage. It's crucial to distinguish between these two categories, to decide which features belong in which category, and then follow it up by adding only the “must-have” features before launch. After you launch your product, you'll have plenty of time to introduce changes and new ideas to the app, however, the app will already be earning money.

Not only that, but it will also show you if your product or service sells. You'll have a real insight into what is perceived as great by your clients, and what needs to be upgraded or introduced to make the app more successful.

So, focus on the most important features, on the way you want the app to look like, on what you want it to be, and once you have it released, work on the details and keep adding new features. Not only will it help you gain profit early on but also it will show your customers that you're constantly working on bringing them something better and more tuned in to their needs.

"I think the best way to attract venture capital is to try and come up with a demonstration of whatever product or service it is and ideally take that as far as you can. Just see if you can sell that to real customers and start generating some momentum. The further along you can get with that, the more likely you are to get funding."

Elon_Musk

Elon Musk


“Be persistent and quick to adapt to changes when needed. If there are small bugs or minor missing features, be ready to move on and come back to them later so that you can move forward quickly to get your MVP deployed.”

David Wender

David Wender

Founder of WhenPlace/in10, WhenTech


“Build the simplest MVP possible and get it in front of people. Shipping fast is 10x more important than shipping the perfect product. It's so tempting to "just add one more feature before we launch". No - you should launch with a minimum feature set, and then add more features after launch.”

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics



“If you are not embarrassed by the first version of your product, you’ve launched too late.”

Reid Hoffman

Reid Hoffman

The founder of LinkedIn


“Overengineering: As technical people, we love creating the best possible technical solution. Often this means that we want to write the most efficient code possible so our system can scale to a million users. Most products never get used by 10 users. It's much better to build something fast, then fix it later if/when you actually need to scale. You will have more money once you have more users too!”

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


Challenge 4: Cultivate a good software development process

Make sure you have a good software development process and make sure it is well run by your people

Managing people is not as easy as it seems. Mostly because it requires you to trust your team. First, as was already said, you have to make sure that you've chosen the right people to work with, then you have to make sure that you have a good software development process and that your devs know what they are doing or should be doing all of the time. It's important to have a good process and a space to write and review tasks and the work of your team. The challenge here is that you have to be specific enough for the work to go smoothly, but not overspecify. Overspecifying, ie. micromanaging not only takes a lot of time, which could be used in better ways but also kills the creativity of your devs. Like we've said before, it's not possible to manage and work on everything and get into each and every task at the same time. Micromanaging can hurt your product and discourage your team of devs. You hired those people for a reason, so use their expertise and let them make their own decisions.

One of the questions you may ask yourself when solving software development challenges is: How else can you make sure that your software development process is plausible? The answer is: By making sure that you actually understand the process. There are many things that one needs to remember when it comes to the development process, so what exactly is the part of the development process?

  • Validation of the business idea
  • Market, competitors, and customer research
  • UX/UI design
  • Development
  • Testing
  • Debugging
  • Product launch
  • Post-launch maintenance

“The greatest people are self-managing – they don’t need to be managed. Once they know what to do, they’ll go figure out how to do it. What they need is a common vision. And that’s what leadership is: [h]aving a vision; being able to articulate that so the people around you can understand it; and getting a consensus on a common vision.”

Steve Jobs

Steve Jobs


Overspecifying: Remember, the devs you hire are humans. You don't need to tell them how to build what you want -> They will work that out. Micromanaging (incl. overspecifying) kills creativity. Leave room for your devs to make their own decisions, and they will surprise you with results better than you could have imagined in the first place.

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


“The best way to reduce costs is to keep your vision focused and to be very involved with creating or reviewing the actual developer tasks. Things often seem simple at first, but when you start writing the actual dev tasks including all use cases, that's when you find that there could be more complex than expected. Some of these things can be major blockers.”

David Wender

David Wender

Founder of WhenPlace/in10, WhenTech


Challenge 5: Pick the proper tech stack

Reducing costs and time of the development process to a minimum by picking the proper tech stack

One thing that can make it simpler for you to achieve success is reducing the costs and time of the software development process to a minimum. Whether you work on your own, with the help of one programmer, with an in-house team of developers or with an outsourced one, you need to always watch your expenditures and do everything in your power to reduce costs and time of the software development process as much as possible. You don't want to end up halfway through your project with little to no money. If you're still in the phase of your software development in which you're thinking which framework to use and you're thinking about choosing a Python backend Framework for your startup, you may find answers in one of our other articles.

As was already said, if you put your energy, time, and money into developing countless features, you might get distracted and lose a lot of resources in the process. It's understandable that we all want to create the best possible solutions, write the most efficient code and sell the best version of our app from the very beginning. However, as was stated above, you'll have more money if you build something fast and work on making it even better after releasing it.

We all love perfection but losing all of your funding on correcting and adding features before the app's release is not a plausible scenario.

There are certain actions that you can take to start solving software development challenges connected to picking the proper tech stack:

“Choose the most popular, best documented, most stable technologies you can (especially for architectural decisions like API frameworks, server infrastructure, programming language, etc).

Why?

  1. Developers are far more effective using well-documented frameworks.
  2. It's so tempting to choose some obscure language/framework because it gives you 20% better performance. Don't. That 20% is not worth it, and you can always fix performance later. If you later discover that your language/framework limitation causes a bottleneck in your app, you can split it out into a separate (micro)service in some performant language later.
  3. Hiring Erlang/F#/Scala/Rust developers is FAAAAR harder than hiring Python/Javascript/Java.

The only exception to this rule is PHP. PHP is very popular, but still don't use it.

Jesse Treharne

Jesse Treharne

Owner and Founder of Tarot Analytics


Challenge 6: Stay motivated

Staying motivated, open-minded and focused on your agenda

It may sound cheesy, but if you want to succeed you need to work on your mindset. A high quality product, a successful launch and even hiring a right talent won't happen unless you keep pursuing it, no matter the obstacles. Overcoming all of the difficulties, staying focused and motivated, as well as persistent, can be more challenging than it sounds. But it is a “must” if you want your project to succeed. Losing your motivation or failing to go through with your ideas can burry your product just as quickly as anything else we've talked about so far. If you don't believe in your own project, nobody else is going to believe in it and buy it from you. Then again, if you do believe that your product can solve a certain problem or make people's lives easier, and you do have a solid plan, funding, and everything else we've mentioned in this article, you have to stay persistent and be open-minded when it comes to the needed changes.

Wonder what some successful business owners had to say about all that? Here are their thoughts:

“Testing, testing, testing. Make sure your developers and development processes give you good unit test coverage from day one. Then make sure you have procedures to test everything else. You want to discover the bugs in your software, not your customers.”

Ed Ireson

Ed Ireson

Co Founder of Jog.ai


“Never. Give. Up. I know it sounds easy, but if you are 100% convinced you are solving a real-world problem and customers are paying for it, and your business model is sound (i.e., large fixed costs, *minuscule* variable costs), then be persistent. Persistence ALWAYS pays off.

But you have to have the right business model. Losing money on every new customer is not scalable- try for at least 90%+ gross margins on variable customers! It can be done.”

Jon Biedermann

Jon Biedermann

Founder/CEO/President of SimplyFundraisingCRM


“A deep understanding of the root causes of client problems answers all your questions.”

Ali_Omar

Ali Omar

Lead Scientist and Chief of Product at Project Caleido


#1 rule- Get customers to use it. And not only 'free' customers (though get those too- they provide your first quotes/references). Get customers more than willing to pay for what you have, no matter how limited it is. But you have to start charging something (we started with $19/month which we no longer offer).”

Jon Biedermann

Jon Biedermann

Founder/CEO/President of SimplyFundraisingCRM


“If you have a dream, you can spend a lifetime studying, planning, and getting ready for it. What you should be doing is getting started.”

Drew Houston

Drew Houston

Co-founder and CEO of Dropbox


“Always deliver more than expected.”

Larry Page

Larry Page

co-founder Google


"If you are working on a product that’s going to be consumer-facing, then feedback is invaluable. You should be out there being brave and talking to people and asking for feedback as much as possible."

emily-brooke

Emily Brooke

Co-founder of Blaze


"I can name dozens of failures that we had over the years. Yet, with all these failures, we still managed to build Appster into one of the largest, and best companies in our industry. So, remember every time you fail, remind yourself these words: ‘Life won’t always go my way, but I will always find a way'."

Josiah Humphrey

Josiah Humphrey

Co-founder of Appster

Challenge 7: Achieve rapid growth

Achieving rapid growth and not losing users after launch

Loss of users is a problem that many startups face in the software development world, and we're not talking about users who leave shortly after you've released your app because it's bugged or not user-friendly at all. We're talking about the problem of users who leave after longer time, those who were with you for months, or a year even. We're talking about the situation where your product is doing great. It's a huge success, and suddenly, seemingly with no reason, people start to leave. Why does that happen?

According to our UX Designer, there are two reasons for that. One is connected to user behavior and the other to product development. If you want to keep your users and even achieve growth long after your app has been released, you need to remember these two things. One: remember that you have to keep your users interested in your product and that developing a cool project is usually not enough to do that. Two: make sure that your product is relevant, keep it up to date. “It's not enough to launch a product and only engage in technical support.” Do you want to know more? Learn 7 UX tips on how to improve customer engagement and how to reduce customer churn from the article written by Maria Krupskaya.

Hopefully, these 6 SaaS Startup Application Development Challenges helped you answer some questions and cleared some things for you. If you still have doubts and feel the need to seek further assistance, no matter what stage your application is currently at, we, at Profil Software, can offer the help of experienced Python Software Development teams ready to provide you with all of the answers. We offer Python Development Company services, React native agency and more.

SaaS
Monika_WójtowiczMonika Wójtowicz
  • +

    What is SaaS application development?

    SaaS stands for Software as a Service whereas SaaS application development means cloud-based software development and launching model that involves the subscription plan and centrally hosted product.
  • +

    Why do most of the startups fail?

    Startups often fail because of money shortages, lack of expertise in the field, lack of an experienced team, poor market research and ineffective marketing, as well as lack of dedication.
  • +

    What is the biggest challenge in software development?

    The biggest challenge is to know when and who to ask for cooperation and assistance. A dedicated team of software developers and a project manager who knows best practices can help you face the biggest challenges of software development.
  • +

    What percentage of all start ups fail?

    According to 106 Must-Know Startup Statistics for 2022 around 90% of startups fail with 10% of startups falling within the first year, which means that over two-thirds of startups never generate positive return.
Profil Software stores cookies on your computer. These cookies are used to collect information about how you interact with our website and allow us to remember you.We use this information in order to improve and customize your browsing experience and for analytics and metrics about our visitors both on this website and other media. To find out more about the cookies we use, see our .