Small business owners are inherently the underdogs in every industry as they are consistently against larger corporations for a share of the pie. That is why one-fifth of small businesses fail and fold in their year. And is raised 50% by the fifth year and up to 80% after a decade, according to the U.S. Bureau of Labor Statistics. Understanding the factors that burden these entrepreneurs will help you see why the statistics are grim for those who take the risk. Here are some of the issues that are staring at small businesses owners:
1.Market Share
Finding new customers are the first and the most crucial obstacle small businesses face when they start up or even well into the 3rd and 4th year. Big brands also don’t make it easier for them as they also compete with each other to get more of the market. You’ll often get pinned between two large companies if you’re trying to go against them head on. The terrain can be particularly harsh for up-and-comers that is why many of them close up shop because they can’t sustain a business when they can’t find new customers.
2.Branding
The food industry is one of the most competitive niche in business that is why many business owners tend to franchise because brand name is key when it comes to food. Successful pizza franchises are always a safe bet if you want to get into the food industry with an already established customer base and world-renowned branding. Brand awareness is important in relation to finding new customers, it can be difficult to attract new customers if they haven’t heard of you. Also, branding represents your customer’s trust on your product and services. So aside from awareness, you must also gain your customer’s trust if you want to stay relevant in your niche.
3.Talent Recruitment
Hiring valuable talent is one of the biggest challenges small businesses face especially when constrained with limited resources. You can expect, as your business grows, that you’ll be having more and more tasks that will take up your time. You will also have to recognize that you can’t do everything on your own. Many of the decisions you’ll make are based on the information you or your staff has gathered, so acquiring a talent pool will be crucial to make your business grow. However, salary is not the only cost for when you want to recruit talent, you will also have to spend on on-boarding costs to make sure you’ll hire well and lessen turnover rate.
4.Money Management
Your day-to-day expenses must be accounted for and covered by having enough cash to go around. Small businesses need to have enough capital, create a holding company to protect your asset or must have other means to shore up extra income to come up with the cash when needed. Business owners will have to focus on making the business grow while having enough reserves to keep the operation going. Money management becomes critical when money is poured into the business. Handling of the accounting and taxes may be within the owner’s scope but hiring professional help is usually the best course of action. This becomes more apparent as you expand and have more clients, employees, and vendors coming in. Getting help in managing the books is key when you want to manage your business’ finances.
5.Balance between Growth and Quality
Growth is certainly the goal for every small business owner, however, there comes a time when you’ll have to make sacrifices to realize your goal. You will have to consider the balance between delivering quality services or product and expanding your scope. The issues of growth may sometimes outweigh its benefits if you fail to manage every client relationship. On the other hand, an unhealthy obsession with quality will hinder your growth to the detriment of your company’s effort and development. Determining the right compromise between the two ideas is key if you want to foster growth while maintaining your company’s reputation.
6.Fatigue
Even the most passionate individuals may succumb to wear with the constant pressure to perform at the highest level at long periods at a time. The dependence on the founder causes them to work longer and harder than their employees with the fear that their business will stall in their absence. However, this mentality causes the owners to fatigue and burn out consequently causing them to make rash decisions and desperation. Finding the right pace can be difficult when you’re the owner, as everything about your business falls squarely on your shoulders.
Entrepreneurs are primarily optimistic individuals that take on challenges to further their development and of their business. Regardless of the size of the business there are constant issues that these entities need to overcome, however, for smaller businesses there are challenges that they must outgrow or face a short-lived endeavor.
