Problems your small business could face and how to overcome them
People who start small businesses are usually passionate about their ideas, but this doesn’t mean creating a small business is easy.
In fact, the first few years of a small business are the most challenging. A 2020 ONS survey suggested as many as 20% of small businesses fail within their first year and 60% within their first 3 years.
While every business is unique, many small businesses face similar challenges within the first few years. Therefore, it’s a good idea to become familiar with these problems and some recommended solutions to assist you in handling the particular issues your small business faces. The more you know, the lower your chances of becoming one of the 60% of businesses that go under within 3 years of starting.
Recruiting and retaining quality employees
This is one of the first times in recent history that the biggest problem small businesses report facing is not funding; it’s finding and keeping quality employees.
70.73% of respondents in a 2022 Guidant survey reported that hiring and retaining employees was somewhat or very difficult compared to previous years. Over half of those asked stated that recruitment and retention was one of their three biggest challenges.
You’ll need to know how to tackle this issue if you plan to launch a business in 2022.
Almost any solution starts with planning. Take the time to consider what you need from an employee. Once you have this figured out, you can write a job description to appeal to potential employees with the right skills.
Bear in mind that you may have to be patient during the hiring process. It can be worth delaying recruitment till you find the perfect person (in terms of skills and fit). Hiring even a lower-level employee can be costly, especially if they don’t work out and you’re forced to recruit someone else.
Once you find the right person, you need to retain them. Competitive pay and employee benefits are two effective ways to ensure you keep the best employees. You may also want to arrange regular check-ins, rewards, and appreciation strategies to ensure people feel valued so that problems don’t sneak up on you.
Previously the biggest problem faced by small businesses, funding remains one of the top challenges across industries. Many small businesses struggle with finances, particularly in the early stages, when start-up costs are higher than running averages.
Every business requires money for their starting ventures and to provide cushioning for inevitable threats and potential expansion opportunities.
If your business doesn’t have adequate finances, you’ll need to investigate funding options.
Some options for small businesses include private and government loans. Alternatively, depending on your business and financial position, you may be eligible for a small business grant. These can be competitive, so it’s worth considering and applying for various funding programs. For instance, options like crowdfunding and venture capital platforms have become increasingly popular alternatives to traditional funding routes.
If nobody knows about your business, you’ll have no customers. Without customers purchasing your products or services, your business will go bust.
Many small businesses get caught up in marketing methods that sound great but don’t necessarily work for their industry or target audience. The most expensive marketing methods don’t necessarily mean the most effective.
There are no one-size fits all solutions to marketing problems but coming up with a plan is the first step. Look at a few different marketing strategies and research your customer market. You might find some low-cost or free options that suit your business to a tee. For instance, if you run a small local business, there’s no underestimating the value of word-of-mouth marketing. You could benefit enormously by offering free samples or reduced prices for an initial period.
If you opt to spend some money on marketing, you’ll benefit from monitoring strategies and outcomes so you can tweak your outreach as needed.
Small business owners often face severe time crunches. When your business starts out, you’ll often be responsible for most, if not all, aspects of the company. This can leave you pulled in all different directions and usually isn’t sustainable.
SMART goals are Specific, Measurable, Achievable, Realistic, and time-based. They can help new business owners prioritize tasks and stick to the most relevant and urgent ones.
It can also be useful to break down larger tasks into smaller, bite-size pieces. Of course, you might not be able to complete all of one task at once, but maybe you can fit parts of it into your day or delegate some things to others.
If you are consistently overwhelmed by the same tasks, consider whether you or an outsourced business could automate the tasks. This may take more time to set up but will take less time in the long run.
Running out of money spells disaster for most businesses. Without financial support, it can be impossible to access all the resources your small business requires. For instance, no money means you can’t pay for tools, labour, or any number of other things which help you run your business effectively while maintaining a high-quality product or service.
Funding can provide you with enough capital to get started, but if you want the money to last, you’ll need to complete thorough financial planning.
You’ll need to consider everything you require to start your business and estimate how much running your business will cost. You should also plan for problems. While you can’t know exactly what will happen, it’s a good idea to think of what could go wrong so you can put money aside for such a possibility. Generally, it is recommended to overestimate these costs.
You should also create a cash flow forecast with sales, losses, and profits predictions.
Facing a gap in your skills or knowledge
Most small business owners know their industry well, but more is needed. As an entrepreneur, you’ll often find yourself making mistakes that could cost you money, sales, or customers. We already discussed how challenging it is to manage your time effectively as a new business owner and having to develop additional skills only fills your plate further.
Learn as much as you can about general business management before you open your business. Once you’re running your business, you’ll have less time and energy to dedicate to this pursuit of knowledge.
Take online courses, attend industry and small business events, and seek mentors.
As a new business owner, you’ll spend much of your time firefighting. Reduce stress and enhance your chances of success by learning what to expect and how to overcome these issues.