Owning and managing a business is a monumental responsibility. As a business owner, you make all of the decisions for your business, which affects your
Category: Business Tips
As a small business, you’re bound to face a number of challenges — especially in the first few years of operation. While there are some obstacles harder to overcome than others, the fact remains that, according to the U.S. Labor Department, 20% of small businesses fail within the first year. Five years after establishment, 50% of them fail; and by the tenth year, 80% of them will no longer be in business.
This is why so many people are apprehensive about starting their own business. In reality, though, many of the problems and challenges encountered are actually solvable. What exactly are the most common problems that small businesses face and how can Due help you overcome them?
1. Lack of capital/cash flow.
According to the 2021 Small Business Trends report, 23 % of small businesses face a lack of capital or cash flow.
It is not uncommon for small business owners to have limited resources. Businesses depend on capital and cash flow to operate and innovate, as well as to generate operating cash. In the absence of them, businesses face immediate danger.
If you want to avoid a cash flow crunch, then the Due blog has some suggestions. Our top recommendations would be;
- Using an invoicing system like Due lets you create and customize invoice templates, set up recurring payments, and automatically send reminders a certain number of days after your due date passes.
- Instead of once a month, consider sending out invoices throughout the month.
- Set up additional systems like automated emails, marketing funnels, and client management software.
2. Recruitment/retention of employees.
Recruiting and retaining employees was cited as the second-largest challenge by 19% of small business owners.
As of the time of compiling the 2021 Small Business Trends Survey, the unemployment rate was at a historic low. A strong labor market can make recruiting and retaining difficult – therefore, small business owners cited this as a challenge by 22 percent in the last year. And, this trend is expected to continue moving forward.
Of course, following the COVID-19, many businesses are following the effects of the Great Resignation. Not only can these drain productivity, but it can also be expensive and time-consuming to hire and train replacements.
If you want to reduce employees, we suggest that you implement the following;
- Promote gratitude within your organizational culture.
- Offer flexibility to your employees.
- Make employee engagement a priority.
- Offer growth opportunities, as well as recognition.
- Refine hiring procedures.
- Create a culture of empathy.
- Share your core values with your team.
3. Marketing and advertising.
Potential customers need to know about your business in order for it to be successful. According to the 2021 Small Business Trends report, marketing, and advertising are the third most cited business challenges (15%).
Despite what you may assume, you can budget your small business on a shoestring budget. Some ideas we suggest your try would be referrals, focusing on your target audience, and sharing valuable content on your blog. You can use networks through online communities and connect with your audience on social media.
4. Time management.
There is never enough time for business owners. And, that’s what it comes in at 14%, making it the fourth-biggest challenge. Specifically, if you’re a small business owner who is wearing multiple hats like CEO, product developer, salesperson, and bookkeeper.
With so much going on, how can you realistically achieve both your long-term goals and daily business responsibilities? While you might want to experiment with time management strategies like using an Eisenhower Matrix to identify the urgent and important tasks that you need to do right now. As for everything else, you can schedule these tasks later, delegate or outsource them to someone else, or remove them from your to-do list altogether.
Administrative tasks (13%) are the fifth-most common problem for small businesses. This includes bookkeeping, payroll, and other duties.
Problems can arise if these functions are not performed adequately. Keeping track of costs, payments, purchases, and sales requires considerable time and effort. This is a necessary function to keep a business running smoothly. What’s more, you also need to be on top of payroll to ensure that you are withholding taxes correctly. If not, you may get penalized by the IRS.
If within your budget, you may want to hire someone to handle these administrative tasks for you. This could be in-house or hiring an outside freelancer. You can even automate some of these tasks, such as payroll. Not only does this save you time, it’s more accurate as well.