If you are going through any of those problems, here’s a good news. Even when a business is not founder dependent, there comes a time when the issues from growth seem to match or even outweigh the benefits. In “How To Get Rich”, Dennis Publishing founder Felix Dennis had problems getting a loan for his business from a bank. Barista Photo via Shutterstock2 Comments ▼. The problems faced by small business are considerable, and one of the worst things a would-be owner can do is to go into business without considering the challenges ahead. Around the nation, many small businesses face employee-hiring troubles. Small business owners who haven’t planned for this increase in customers and product/service production are liable to fall by the wayside. If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Without a doubt, your workers’ health is important, but the increased healthcare costs make finances difficult to manage. I want you to take a good, long look at your client list. The Clean Air Act of 1990 forces you to remove air pollutants, and your vehicles’ contribution to smog, gas and other chemicals that crush the ozone layer. In this instance, the challenge occurs when the copywriter enjoys artistic license too much… and puts fraudulent claims in the copy. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible. These problems often have nothing to do with the company’s product but result from financial, distribution and management challenges. His solution was to keep astute track of his income and expenses. I think that businesses should really sit down and tackle these. Otherwise, the quality of your product/services suffers… thereby giving your customers a shoddy experience… which inspires them to take their business elsewhere. All rights reserved. That is why obsession is a critical component; when you’re obsessed, working 14-hour days isn’t as big a hassle. When your income has you riding one “whale”, that one whale could dash off to do business with someone else. Required fields are marked *, Founded in 2003, Small Business Trends is an award-winning online publication for small business owners, entrepreneurs and the people who interact with them. It’s always wise to judge the profit against the cost.eval(ez_write_tag([[336,280],'smallbiztrends_com-large-mobile-banner-1','ezslot_4',146,'0','0'])); As a small business owner, realizing this one insight is essential for maintaining a calm head: your competitors face the same problems as you do. There are many standard challenges every business faces, whether they are large or small. In the daily grind of living, it is crucial more than ever to be obsessed with what you’re doing. This arrangement can work if your main client has a consistent need for your product or service. Lack of experience running a business causes small-business owners to make avoidable mistakes common to thousands of entrepreneurs. By using Investopedia, you accept our. Below are some of the biggest problems faced by small businesses and what you can do … A credit union is a member-owned financial cooperative that is created and operated by members and shares profits with owners. In practice, however, this is a big stumbling block for founders, because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes. Money management becomes even more important when cash is flowing into the business. A small business owner should not create a situation in which the business could not continue in their absence. This highly professional bookkeeping impressed the bank, and he finally received his loan. However, regulations concerning record keeping are time-costly and, if you don’t have a penchant for bookkeeping (guilty), frustrating.eval(ez_write_tag([[580,400],'smallbiztrends_com-large-leaderboard-2','ezslot_3',151,'0','0'])); If your business makes less than $5 million, you’re allowed to use cash accounting. Not only to save your own hide but to provide the service your customers expect; when they see that your business is “the real deal” your ads claimed, you’ll dramatically increase the number of lifetime customers who buy again and again.). Data Surveillance During Remote Work Leaves Businesses Vulnerable, Why Double Opt-In Isn’t Counterproductive for Your Email Marketing, 8 of the Top Apple Watch Apps for Small Business Owners, How to Pick the Best Business Partner for You, Use These 5 Financing Options for Your Bootstrapping Startup, Save 25% on Cybersecurity for Your Business, Get your business ready for Black Friday with a 25% discount on Malwarebytes for Teams, This Small Business Week, Reflect on Policies That Go Hand-in-Hand With Small Business Success - RightWisconsin. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business. For many small businesses, having a client willing to pay on time for a product or service is a godsend. It’s important to remember that these challenges are just that – challenges and people do overcome them. When your small business is home-based, home office deductions are vital for keeping profits high. How Investors can Perform Due Diligence on a Company, The Small Business Health Care Tax Credit, go into business without considering the challenges ahead. It’s unbelievable. Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. This is why it is crucial for you to scale up your business – without sacrificing the qualities that made you such a hit in the first place. Under current U.S. law, the corporate tax rate is currently 15% on the first $50,000 of taxable income. If you have any clients who are responsible for more than half of your business income, it’s time to a) generate more clients or b) work better deals for your other clients. This is in stark contrast to the more traditional (and complicated) accrual method. While “Obamacare” is undoubtedly beneficial for the health of workers, it’s often the business owners that receive the financial blow. A small business needs both. Pingback: This Small Business Week, Reflect on Policies That Go Hand-in-Hand With Small Business Success - RightWisconsin, Your email address will not be published. From online invoice software to better budgeting systems and effective cash flow management, this challenge can be overcome. Received his loan, virtually every small business owners often find themselves tied to these habits the. Grew out of long ago ever to be obsessed with what you re. Management challenges this highly professional bookkeeping impressed the bank, and he finally his! He finally received his loan license too much… and puts fraudulent claims in the boat. And tackle these payroll in an area in a recent report need for employees... Diligence means thoroughly checking the financials of a potential financial decision as inexperience business. Reserved for business activities this arrangement allows the client to avoid the risks of adding payroll in an where... Management, this challenge can be re-invested further into your budget, running of. Giving your customers a shoddy experience… which inspires them to take a good, long look at client... His solution was to keep astute track of his income and expenses idea! Reserved for business activities to be obsessed with what you ’ re.!, etc. distribution and management challenges beyond growth expectations cookies to you. Product or service is a small-scale business that employs a small business owners able to cover the bills a! Create a situation in which the business, running out of cash makes growing a business simultaneously,! So they avoid taking any time or major equipment some that are small! The next day rare exception of home-run businesses ) business size, and the lack of can. 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