Small businesses that survive five years after inception are about 45.4% to 51%. By the tenth year, only one in three firms is still operational. But why is that so?
The first few years present a myriad of challenges to upcoming businesses. Most business owners at this stage lack the resources and expertise necessary to navigate through the problems. Yet, being consistent amidst the challenges can yield results.
If you want to start a business, you'll need to be knowledgeable about potential hurdles. Running a successful small business is no small feat. Click here to learn the major small business challenges facing most entrepreneurs.
One of the challenges facing small businesses is a lack of funds. Contrary to giant corporations, small businesses work with a considerably limited budget. They lack the adequate cash flow to run operations.
Your small business is prone to a shutdown if two or three clients fail to pay. Some business owners have to use their savings to pay vendors and employees. While some moves aim at keeping a business afloat, failure is imminent.
Conversely, your small business can fail because of poor financial management. Not all enterprises lack funds in the first few years. But when the cash starts flowing, an upcoming entrepreneur might fail to manage the funds wisely.
Aspiring business owners should save enough cash to fund their business. If you don’t have enough savings, a bank loan can be an ideal option. Research on the best deal that resonates with your business needs.
For financial management, bookkeeping should be a priority. Have a working budget, and stick to it. You can engage a professional financial consultant to guide you on money management.
Renowned brands develop strategies to attract new customers and retain existing ones. For new business owners getting customers is one of the small business challenges you’ll have to face. The process can be expensive and exhaustive.
You will need to promote your products to attract potential buyers. If you’re already in a financial crunch, the promotional activities might be daunting. Yet, failure to market can cost you your business.
What’s more, most consumers are comfortable with familiar brands. When you decide to have a coffee shop, you will need to convince consumers that your coffee matches up or is better than Starbucks’. Establishing a clientele base can be overwhelming, leading to unanticipated business closure.
You’ll need to have an inexpensive strategy to attract customers. Start with the local customers. Your friends and family can make up a vast clientele; they will even offer a free word of mouth advertisement!
Create buyer personas and personalize your marketing. Stretching your target market too wide will overwhelm you. Start small and expand your market as your business grows.
Would your small business still thrive if one of your most consistent clients bailed out? If not, then you are client dependent. Most small businesses focus on one or two ‘big’ clients.
When looking for customers, be diverse. Depending on a single client can cripple your business in a whisker. If half of your profit is from one client, go back to the drawing board.
A small business might focus solely on a client who seems to pay well. While that’s a dream-come-true for any business owner, the adverse implications might bring down your business. By diversifying, you spread your risks and limit cases of unforeseen company’s closure.
The same attention and quality of service you give to your valued client should apply to all customers. Don’t focus on the immediate value you get from a client. Building long-term relationships with all your customers will make your business sustainable.
Employees are a company’s valuable asset. You’ll need to hire the best talents for your business to thrive. But for small businesses, hiring qualified staff can be challenging.
Your compensation package should be attractive enough to lure and retain competent workers. Your small business will be competing with large corporations for qualified workers. Unlike the multinationals that can hire employees for a specific task, your employees will be subject to multiple roles.
Retaining employees in a small business is tough. Most of the workers are ever searching for better opportunities. If you can’t meet their financial desires in the form of salary increments and bonuses, chances of survival are rare.
About 30% of a company’s compensation plan is employees’ benefits. Your small business might face high turnover if you don’t implement such incentives. With limited finances, monetary motivation might be unachievable.
You will need to lower your expectations when hiring. Getting top talents would require you to dig deeper into your company's financial reservoirs. You can employ at entry-level and have regular in-house training.
With the advent of technology, you will need to adopt its use to remain competitive in the 21st century. Small businesses need technology for daily operations. You will need computers, internet, and web applications, among other technological functions.
One of the small business challenges facing many startups is the lack of technology. If you don’t have technological expertise, the chances of investing in advanced technology are rare. Besides, you will need to invest heavily in having the best tech services.
Technology promotes effective communication and makes operations run smoothly. With technology, you can reduce costs by sharing some tools. Furthermore, technology improves flexibility in business operations.
If you haven’t adopted new technology for your small business, you should consider investing. There are credible companies that provide advanced IT support. You don’t need to worry about your limited technical knowledge.
Founder dependence is among the problems faced by small businesses. Entrepreneurs lay the foundation of their business to prompt its growth and survival. The goal of the founder is probably to create wealth, self-employment, and improve family welfare.
When the founder is not there for whatever reason, the small business might collapse. Founder dependency refers to a situation where a company can’t survive in the absence of its founder. This small business issue is prevalent in a sole proprietorship.
If you have to be present for your company to grow, then founder dependence is at its peak. The level of direct involvement in your company shows the extent of the reliance. You can't be handling accounts and still address all customer issues.
For your business to have continuity, empower your staff. Allow your employees to own processes so that they can make the workplace a better place. Empowered people will still run operations efficiently, even in your absence.
A succession plan should be in place. Most people relate such decisions to death. In reality, several situations can make you incapable of running your business.
The difficulties in creating brand awareness are amongst the small business challenges that have made many entrepreneurs to down their tools. You’ll need to spend significant resources to be a household name. Sufficient brand awareness is the only way your business will grow.
You require deliberate brand awareness strategies to succeed in your business. Branding is an art. Be innovative in crafting a brand that will sell.
With the limited resources in small businesses, branding and creating awareness can be hard. You will have to differentiate your brand to propel it forward. Convince your target market why they should trust your products.
One problem you are likely to experience in branding is issues with creativity. You might need to have a creative team to hack. That's means that you require more talents on board, which costs more money.
Branding is not a one-time activity. You need to be consistent and rebrand as necessary. With time, you won’t have to struggle with brand awareness.
Despite the passion you have for your small business, fatigue is inevitable. During the first years of a company, the founders are like the backbone. Besides playing managerial roles, they have to be hands-on when it comes to technical work.
Business owners suffer from fatigue resulting in dwindling performance. Once the entrepreneurs spend quality time and energy on operational and technical work, the leadership role suffers. A founder spends less time strategizing and planning.
On a typical day, business owners work for longer hours to increase productivity. They hardly take time away to recharge. Founders have a fear of business stalling in their absence.
But fatigue is more detrimental to a business than your absence as the owner. You need time to kick away fatigue and rejuvenate. Relaxation will increase your productivity and that of your staff.
Other than the business owner, employees also face fatigue in a small business. The number of workers is mostly low, meaning that most employees will have multiple roles. Consequently, they will suffer fatigue over time and possibly resign.
For small business owners, there’s always an unfinished task. Twenty-four hours never seem enough. You feel you want additional hours to have everything in order.
You need adequate time management to increase your productivity. Track your time and seek ways to append time on vital activities. You can delegate some tasks and automate other.
Create a schedule and set time for each activity. Ensure that you include leave days and breaks. Stick to the schedule to bring a sense of order.
Time management will help you to have a work-life balance. Besides, you can focus on your work during the morning hours and schedule afternoons for meetings. Planning on what to focus on at a particular time is a great success recipe.
Furthermore, you will need to lead your employees by example. If you get things done within specific deadlines, they will adopt the culture. Your team will also try to get to the workplace based on your timing.
Standing desks increase employee productivity by a staggering 46%. Companies have been adopting several strategies to promote exceptional customer service. Small business challenges, such as the imbalance between quality and growth, have been a challenge to small businesses.
New businesses hardly manage to maintain the quality of products as the business grows. The overwhelming orders can lead to production and supply of substandard goods or services. Your customers will start feeling the impact if the quality of service reduces.
Conversely, over obsessing over quality, can lead to business stagnation. Most new business owners want to have a personal engagement with clients to ensure customer satisfaction. While you drain all your energy into customer queries, you might miss other aspects of your business.
You’ll need to have a balance for your small business to make it to its fifth year. Delegate some tasks. You can focus on your area of expertise.
Small business challenges such as competition can make you give up on your startup. The online and local competition presents one of the standard small business problems you can’t control. You can only adjust some internal factors to deal with the competitors.
You’ll hardly get a unique business idea. Competitors are everywhere, and innovativeness at this point is paramount. If you open a bookstore, be sure there are other more prominent and more visible chains.
Competition should not make you quit. Strategize on ways to differentiate your business. You can offer your products at a reasonable price for a start.
Focus on embracing unbeatable customer service. Your clients will appreciate the personalized shopping experience and make return visits. Have loyalty programs for your customers and giveaways occasionally.
Most of the issues that face startups have solutions. When you decide to start a business, understand the small business challenges and their possible solutions. If you are consistent, you will succeed in the end.
It is essential to know that all the popular brands went through some of these challenges before becoming household names. What’s more, your competitors are also facing problems. Your response to these challenges is what differentiates your business.
For most challenges, there’s a workable solution. Don’t give up.
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