So there you are - out there in the jungle, so to speak, and working every day to make your small business successful. You deal with your employees, your clients, and everything else in between. You tackle daily decisions regarding strategy and marketing and pushing your business ahead of the competition. From the outside looking in, it may seem like the only obstacles you face are from other competing businesses and clients. But the truth is that a fair number of major challenges that small business owners encounter has little to do with the actual business.
Giant #1: Economy Blues
Much like natural disasters, the economy can be equally unpredictable and destructive. Financial consultants and economic whizzes can provide a relatively informative forecast, but it is still mostly guesswork and conjecture. The economy can sometimes shift unexpectedly, and the effect can be anywhere from annoying to devastating for small businesses.
Many times, the economic forecast is directly and greatly affected by the actual weather. In August 2017, Houston residents (and business owners) could not imagine that Hurricane Harvey (which weather experts predicted would be gone by Sunday) would turn into the worst natural disaster in Texas history and the costliest natural disaster ever for the United States.
The storm both negatively and positively affected the economy for the entire nation - the damage to property and lives was well over $100 billion, but the substantial rebuilding of Houston homes and businesses has been a boon for multiple industries (construction, transportation, real estate).
Giant #2: Regulation Compliance
As a small business owner, you may already be familiar with manning multiple stations – the main idea person, the human resources person, the payroll and accounting person, and also the regulation person. As the boss, you are ultimately in charge with your company’s compliance with state and federal regulations.
So why is this so challenging? The number and types of state regulations can vary by state/county/city. California is one place where small business owners can easily get buried by the mountain of regulations (especially new environmental laws). Additionally, laws can frequently change and if you are not keeping an eye on updates to state and federal regulations, you may end up with additional fees on top of the other responsibilities.
Giant #3: The Client Rut
Sometimes the “monsters” come from the outside, and other times, you have a hand in piecing Frankenstein together yourself. Or rather, you dig your own hole for your business because you are unwilling to get out of your comfort zone. That iconic salesman who sold Eskimoes on ice machines/freezers probably headed north because the market in the hotter part of the country was already saturated. If you want your business to grow and not fold within the first few years, then you may have to move beyond your initial targeted customers. And definitely, you need more than a few “big gun” clients to expand your business.
In short, diversify to stay alive.
Giant #4: The Cash Trickle Dilemma
One of the more common challenges that the majority of small business owners face - running out of money. According to recent reports, a little over 80% of small business failed because of cash flow problems. In fact, almost 40% of new businesses have faced money problems in the past few years.
A few reasons why businesses run out of capital:
- You aimed too high when estimating your company’s profits.
- You spent too much money in the beginning.
- You were too relaxed about unpaid invoices.
- You did not make a rainy day fund (or you did not keep it stocked).
The good news is that this challenge can be turned around with better budgeting and more focused attention on making sure that your company is properly and promptly paid by customers.
The Silver Lining
Even though some of the challenges you face as a small business owner may seem like one giant after another, many of these gargantuan obstacles can be handled by researched and focused planning, professional assistance (i.e. consultant, tax professional), and sometimes regular, unscented common sense. And sometimes a slingshot or two.