There’s nothing quite like the excitement of owning your business. But often it also involves plenty of challenges you need to understand and be prepared to handle.
Here are six common small business problems and suggestions for how to deal with them.
Money management
By far the biggest hurdle faced by start-ups and other small enterprises is money. Too many times, entrepreneurs don’t start out with enough capital. Start-up costs often exceed budget.
The other factor is cash flow. It’s easy to be overly optimistic when projecting a break-even point. Be careful about forecasting unrealistic sales figures, or cutting your operating budget too thin. Many experts suggest having enough cash on hand to sustain the business for two years, at a minimum.
Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. The complexity of a business’ books go up with each client and employee, so getting an assist on the book keeping can prevent it from becoming a reason not to expand.
Failure to Plan
All too often entrepreneurs start their business with good intention but no planning. Many of them become casualties before they get very far off the ground.
If you want to succeed, you’re going to have to treat your small business in much the same way that larger, successful companies treat theirs. Have a strategic plan with your vision, goals, and some market analysis. Develop a business plan with a detailed budget, cash flow and break-even analyses. Business plan does not have to be long but don’t cut corners, learn what goes into preparing a good, solid business plan and review it every 6 months. You will notice that the plan will keep on changing with the growth of your business.
Not getting expert advice
You will pay a little more for a lawyer, a CPA and a financial planner (CFP) to get your business established and running than if you do it yourself. But mistakes can be extremely costly. Good professionals will more than pay for themselves over time and you’ll sleep better knowing that you have things set up properly.
Client Dependence
If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying the client base is vital to growing a business.
You will need to build your brand, advertise, create your website, blog, and increase your social media exposure. Marketing will have to become your best friend in order to increase market awareness and reach new clients.
Fatigue
The hours, the work and the constant pressure to perform wears on even the most passionate individuals. Many business owners, even successful ones, get stuck working much longer hours than their employees. Moreover, they fear that their business will stall in their absence, so they avoid taking any long breaks away from work to recharge. When fatigue sets in, the weariness with the hours and the results can lead to rash decisions about the business, including the desire to abandon it completely.
That is why outsourcing some task is necessary. As a business owner you should become a “project manager” and not the person who does it all.
Founder Dependence
If you get hit by a car, is your business still producing income the next day? A business that can’t operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and this dependence is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows.
Having right people to work within the business will help you to plan the next stage of your business growth.
All those challenges are not easy to overcome, but with proper planning and consistency, you will be able to create a phenomenal and successful business and never look back to working for others.
Katherine Isbrandt CFP
ASIRE Financial Planning