Small Business Financial Challenges
Starting and operating a small business is a dream for many aspiring entrepreneurs and career professionals seeking new outlets of creativity. Running a successful enterprise brings the promise of being your own boss, more time with your family and financial independence. However, the road to these benefits has problems and challenges that you need to be ready to tackle.
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New Customers and Sales
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Year after year, it is difficult for established businesses to acquire new customers and generate new sources of revenue. The challenge is even greater for start-ups and small businesses. Small firms often lack the marketing budgets and fire power to jump start new sales efforts. They must rely on more cost effective and creative methods, such as networking or barter, to generate new business and awareness.
Financing and Access to Capital
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Companies need capital to grow and expand, and it is often hard to come by, especially for new ventures. Banks prefer to lend funds to businesses with sizeable operating cash flow and companies with years of established track records. Small businesses often lack one or both of these items to please a bank. If approved, the amount of the loan, term and interest rates are often less favorable than a loan extended to a larger corporation. The small businessperson may even have to sign a personal guarantee on the note, putting greater exposure on the owner.
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Hiring and Retaining Employees
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As a company grows, it needs employees to increase sales and better support the operations. One of the toughest steps for a small business is to take that first step from one employee to two or more. The small business owner, who has likely been performing all functions of the business from start-up, can often struggle bringing on team members willing to work through this transition time. Additionally, small businesses often offer less in the form of career advancement, health insurance benefits, 401(k) and other amenities that an employee can get at a larger corporation. This makes it difficult to retain key workers.
Identity Development
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Small businesses sometimes have a tendency to do too much at once. This may be because of a desire to survive and pay the bills, but it can make it difficult to focus on longer-term strategic goals. Smaller businesses can find it more difficult to identify the optimal audience it should be servicing based on its expertise, capabilities and resources. Small business owners often can find themselves very busy, but failing to make significant strides to building a sustainable and scalable business.
Adjustments at Home
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Small business owners, especially in start-up ventures, face some challenges that extend beyond business borders and potentially into the home. Long hours, nights and weekends are often a requirement to help get a new small business off the ground. Furthermore, even the most frugal of entrepreneurs know it takes some cash to get things moving -- cash often provided from the owner's personal savings while waiting for clients and contracts to start coming in the door. The extended work hours and financial strain can lead to problems at home with spouses and other family members.
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References
- Photo Credit business 2 image by Nathalie P from Fotolia.com
