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 face 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 small 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 itself.
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
Imagine that you are a tightrope walker - right before your performance, the boss decides that you will do your act while carrying a backpack of kittens. And he wants you to wear bells on your wrists and ankles. He also thinks it would be great if a parrot sat on your shoulder. So not only do you still have your act to finish, but you also have to keep the kittens from clawing you senseless and the parrot from distracting/biting/annoying you. And do not forget the bells. For most small business owners, trying to run their business AND stay in line with the government regulations can feel much like a tightrope walker holding a bag of kittens and a parrot (and wearing bells).
Unlike the giant in the Bible, this particular monstrosity grows over time - as your business builds and you expand, hire employees, and bring in substantial revenue. All new businesses must comply with some regulations right away, like your company’s classification as a small (medium or large) business, environmental regulations, and state-required permits and licenses.
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.