Are you considering starting a small business?
While running a small business certainly has a wide range of perks, establishing and maintaining a small business is no easy feat. In today's ever-changing economy, small businesses face a number of challenges.
As a result, many small businesses fail to succeed and have no choice but to close their doors. In fact, 50 percent of small businesses are said to fail within the first four years.
Fortunately, many of these small business challenges are certainly fixable and can be overcome. In order to best prepare for these challenges, it's essential to understand what these challenges are in the first place.
If you're planning to become a small business owner, you're going to want to read this. We're outlining the ten most common small business challenges that you can anticipate as a small business owner.
1. Increased Minimum Wage
As minimum wage continues to rise, small business owners face a number of challenges in the ability to pay their employees. In turn, business owners now responsible for paying higher wages to their employees will have to budget accordingly.
For most businesses, this comes in the form of increasing the pricing of their products or services. These increased prices may encourage a once loyal customer to shop at a competing large-scale business. This is because larger stores can typically afford to price their inventory slightly lower.
2. Health Care for Employees
For small businesses, it may be difficult to manage the appropriate health care and benefits for their employees.
As health care costs continue to increase, it's becoming more and more challenging for small businesses to afford and plan for these costs. While most agree that maintaining healthy employees is a priority, ever-changing tax and healthcare laws make this a very steep challenge.
3. Income Taxes
Federal income tax is surely one of the most challenging costs for small businesses. This is especially the case for states in which the income tax is greater and only continuing to rise.
For a small business that affords only a small budget, these costs can be devastating. This is especially the case when the costs are not properly budgeted for or the costs are greater than originally anticipated.
4. Competing Businesses
Another significant challenge for small businesses is competing against other, large-scale businesses.
Large-scale businesses often have greater budgets, support, and services. This is compared to smaller businesses that are working with tighter budgets and have reduced support.
Unfortunately, a minimal budget means that smaller businesses often carry higher prices. For the majority of consumers that are price-driven, it can be difficult for small businesses to gain loyal customers.
Each and every small business owner will tell you about the intense workload and long hours required in running a small business.
After all, many small business owners are faced with working longer hours than they had originally anticipated. This is to make up for times in which employees are sick, the workload increases or unforeseen circumstances arise.
Because smaller businesses typically employ fewer employees, the intense workloads can fall to the business owner. Unfortunately, fatigue can lead to significant problems for the business and the potential for burn out.
6. High Turnover Rates
Unfortunately for small businesses, a high turnover rate may be a reality.
This is often due to the fact that employees feel they will see more benefit from a large-scale company offering a similar position. Likewise, small businesses typically employ fewer people. As a result, some employees grow to feel that small businesses contain less flexibility and added responsibility.
Considering the cost for a small business to provide training to new employees, it's simple to understand why this has become so costly.
7. Increased Business Demands
As small businesses continue to grow, it can become difficult for businesses to meet these needs.
This may be due to limited facilities, employees and budgets. While the demands of the business continue to rise, small businesses may experience hardship in keeping up with the increased requests.
For example, a small business that once produced their products locally may have to consider overseas production. While this helps to manage increased demand and save money, it can also lose customers.
8. Unexpected Costs
For small businesses, cash flow management is not always easy. This makes it difficult to plan for and deal with unexpected business costs.
Let's use the example of a small business in which the company roof requires immediate repair. For many small businesses, such a significant expense may not be realistic for the budget. However, without this repair, the production will cease and profits are lost.
For a large-scale business, these unexpected costs are far less devastating and significant.
9. Government Rules and Regulations
Every now and again, new rules and regulations are introduced to small businesses from the government.
While these regulations do aim to breed positive changes to the world overall, they can present challenges to business owners. These regulations may be environmental, employee or business and advertising regulations.
For example, a new environmental regulation may force all businesses to produce fewer air pollutants. While this is a positive change to our planet, it can be expensive for small businesses to make these changes.
10. Business Independence
In order for a business to run successfully, it must have the ability to function even in times of despair.
In the event of an accident, the business needs to have the ability to continue producing income directly following the accident. Without this ability, the business is sure to be on a deadline.
For small businesses, founder dependance can present itself as a common issue. This is because small businesses typically employ few employees and the responsibilities are thus divided between only a few employees.
Preparing for Small Business Challenges
Did you know that only one-third of small businesses will survive more than ten years?
Establishing a successful small business takes hard work, dedication and preparation. If you're thinking of establishing a small business, it's essential to prepare for the challenges that may be ahead of you.
These small business challenges may come in the form of minimum wage increases, high turnover rates and the hardship of meeting increased demand.
Fortunately, overcoming these issues is not impossible. In understanding and preparing for these challenges ahead of time, your small business is far more likely to become a success.
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