Starting a small business can be an exciting time. For many entrepreneurs, opening a business is something that they’ve dreamed of for years –and when the big moment finally arrives, it’s a major accomplishment.
But there’s a reason that only 50 percent make it to the five-year mark. Running a business can be tough –and in many ways, is harder than starting one. Small businesses face a number of challenges –and for business owners, these issues can quickly escalate into bigger problems that, if not addressed, can cause a business to lose its footing.
While there are a number of challenges that small businesses face –let’s take a look at a few of the most common ones –and see what you can do to mitigate them.
1.Cash Flow Issues
Small businesses rely on cash flow –especially in the beginning before things have taken off. Bills are due every month and companies that haven’t had a chance to save up extensive reserves can quickly find themselves in trouble when a customer doesn’t pay –or when unexpected expenses come in. For this reason, it’s important to try to save up enough capital for unexpected expenses in an emergency account –and to be able to pick up extra income to replenish your cash reserves when needed.
2.Lack of Marketing
There’s a saying that, “When business is good, it pays to advertise; when business is bad, you have to advertise.” For small businesses, this couldn’t be more true. Small companies are, for the most part, largely unknown –and it’s important to do everything that you can to get the word out about your products or services. Failing to market will prevent your company from growing and keep customers from finding their way to your door. You might have the best business in town, but that means very little if no one knows about you.
Unmotivated employees are a problem that many small businesses face. Without proper motivation, your employees are not going to be performing their jobs to the best of their abilities, and it’s important to create a workplace that motivates –and inspires your team to do their best. Foster a relaxed atmosphere, where workers are encouraged to communicate with management, and make it a point to ask workers about their needs. You should also provide opportunities for training and give employees the chance to advance their careers within the company to keep your workers motivated, and to reduce your turnover rate.
4.Lack of Direction and Planning
Many companies go under due to a lack of direction and planning. All too often companies are started for the wrong reasons –or exist simply to provide a service or product –while little thought is given to the goals and mission of the business. But taking the time to develop a business plan is important –it will allow you to create a road map that you’ll be able to follow, and will provide you with useful market research as well as analysis of the competition, allowing you to make important decisions based on facts and figures, rather than simply making reactive decisions, going with whatever seems right at the time.
5.Difficulty Balancing Growth and Quality
Most small business that grow beyond a certain stage will start having issues balancing growth and quality. While you’ll want to ensure that every order is fulfilled –you’ll also want to find a way to ensure that they’re done to high standards –even if you’re not there to supervise. When you reach this point, it’s important to look for ways to update your processes to scale your company, without hurting your brand.
6.Working in the Business, Instead of on It
Many business owners are tempted to be involved with every aspect of their business –and while this may be necessary in the very beginning –over time, it’s important to look to set up your business to run independently of you. To do this, you’ll need to focus on working on your business –instead of working in it. As the author of The E-Myth Revisited, Michael Gerber wisely notes, “If your business depends on you, you don’t own a business –you have a job.”
There are many challenges that business owners face, but that doesn’t mean all small businesses are doomed. Knowing about the challenges and taking the proper steps needed to avoid the pitfalls can help you remain ahead of the game and keep the upper hand.