To overcome them, you need to know what they are
Starting a business is a big success for many entrepreneurs, but running a business is the biggest challenge. There are many common challenges that every business faces, whether large or small. These include hiring the right employees, building a brand, developing a customer base, and so on. However, some are purely business problems that most large companies have long since overcome.
Here are the top five challenges for small businesses.
- customer dependency
If one customer accounts for more than half of your revenue, you are more of an independent entrepreneur than a business owner. Diversifying your customer base is essential to grow a business, but it can be difficult, especially if the customer in question pays well and on time. A customer willing to pay on time for a product or service is a godsend for many small businesses.
Unfortunately, this can lead to a long-term handicap, because even if you have employees etc., you can always work as a subcontractor for a larger company. In this way, the client avoids the risk of hiring additional staff in an area where work can run out at any time, and all the risk is transferred from the larger company to you and your staff. This arrangement can work if your main customer has an ongoing need for your product or service.
- money management
Having enough money available to pay invoices is a must for every company, but also for every individual. Whether it is your business or your life, one is likely to be a money drain that puts pressure on the other. To avoid this problem, small business owners need to be strongly capitalised or obtain extra income to supplement cash reserves when needed. For this reason, many small businesses start with the founders working and building the company at the same time. This dichotomy can make company growth difficult, but when cash runs out, company growth becomes impossible.
Money management is all the more important the more cash is brought into the company. Although most entrepreneurs are able to manage their bookkeeping and taxes themselves, professional help is usually a good idea. The complexity of a company’s books increases with the number of customers and employees, so help with bookkeeping can prevent this from becoming a reason not to expand.
The long hours, the work and the constant pressure to achieve results wear out even the most passionate people. Many entrepreneurs, even successful ones, have to work much longer hours than their employees. Moreover, they fear that their business will falter in their absence, so they avoid taking time off to recuperate.
Tiredness can lead to hasty decisions about the company, to the point of wanting to abandon it altogether. Finding a rhythm that allows the business to be maintained without exhausting the owner is a challenge that arises early (and often) in the development of a small business.
- the founder’s dependence
If you get hit by a car, will your business continue to generate revenue the next day? A company that cannot function without its founder is a company with a deadline. Many companies suffer from dependency on the founder, often due to the founder not being able to let go of certain decisions and responsibilities as the company grows.
In theory, it is easy to overcome this challenge: the entrepreneur simply has to cede more control to employees or partners. In practice, however, this is a significant obstacle for founders, because it usually means compromising the quality of the work done (at least initially) until the person doing the work has learned the trade.
- balance between quality and growth
Even if a company does not depend on a start-up, there comes a time when the problems of growth equal or even outweigh the benefits. Whether it is a service or a product, at some point a company has to make cuts in order to grow. This may mean not being able to personally attend to every customer relationship or review every widget.
Unfortunately, it is this level of personal involvement and attention to detail that determines a company’s success. As a result, many small business owners get stuck in these habits, which is detrimental to their development. There is a wide middle ground between sloppy work and an unhealthy obsession with quality; it is up to the entrepreneur to align their processes to a compromise that allows growth without damaging the brand.
The problems that small businesses face are considerable and one of the worst things a budding entrepreneur can do is start a business without thinking about the challenges that lie ahead. We have looked at how to make these challenges easier to overcome, but there is no way around them.
On the other hand, the competitive drive is often one of the reasons why people start their own business, and every challenge is another opportunity to take on the competition.