Starting a new business is exciting—the self-sufficiency of running your own business is parallel to none— however, it is equally challenging.
The past few years have been exceptionally tough for small businesses. The global pandemic, followed by disruptions in supply chains, economic uncertainty, and lack of funds, has forced many thriving small businesses to shut down.
These challenges faced by small businesses in recent years have strengthened only one belief, and that is: to remain agile, resilient, and adaptable to the variations in the external and internal business environment.
Most importantly, they require you to constantly review your small business and address the challenges it faces or might face in the future by devising innovative strategies.
Some challenges that small businesses face and their possible solutions are shared below.
1. Health Insurance for Employees
Since small businesses have limited budgets, offering health insurance as part of employee benefits is often impossible. Nevertheless, health insurance can attract top talent and ensure employee satisfaction.
As a small business owner, you can encourage your employees to enroll in a health plan through the Health Insurance Marketplace that makes them eligible for PTCs (Premium Tax Credits) (contingent on their income and family size).
PTCs are a form of financial assistance provided by the government which assists families and individuals in paying their health insurance premiums.
To receive PTCs, ensure that your employees file the premium tax credits form, also known as Form 8962. The form decides and reconciles the amount of PTCs received during a year, ensuring that the taxpayers receive the correct amount of PTCs.
As a small business, you can assist your employees in correctly filling and filing Form 8962. This way, you can optimize budgetary constraints while ensuring the well-being of your employees.
2. Rising Inflation
The US is facing a major rise in inflation, with around an 8.6 percent increase in the consumer price index between May 2021 and May 2022. However, the US is not the only country grappling with increasing inflation since around 60% of the economies in the world are facing this issue.
The rising inflation, increasing the costs of goods and services, hits small businesses, already facing financial problems harder than big businesses. In such dire situations, many small companies fearing a recession, hesitate to take the next step in their business journey.
If you are considering starting a small business, you can traverse the challenges of increasing inflation and survive in uncertain market conditions through smart planning. For instance, if starting a business from scratch is not viable, consider buying a franchise or merging with a renowned business.
For several compelling reasons, the franchise business has gained immense popularity in recent years. For starters, it offers an existing customer base and training support from the franchisor. The popularity and success of the franchise business can be understood from the fact that around 35% of the new businesses in 2023 were franchises. Whereas new independent businesses were only 21%, showing a decrease of 23% from the last year.
On the contrary, if you’re already a small business owner, try reducing your expenses to offset the challenges of inflation.
3. Recruitment And Retention of Competent Employees
Though you cannot offer extensive salaries and benefits, you can still devise creative strategies to attract and retain top talents. Strategies like flexible work hours, employee training, and a strong emphasis on positive and productive company culture can drastically solve staffing issues. Incorporating employment references as a standard part of your hiring process further strengthens your ability to select candidates who are skilled and a cultural fit, making them more likely to stay and grow with your company.
4. Marketing and Advertising Issues
Small business owners aren’t unfamiliar with marketing and advertising issues, including a restricted budget. Budgetary constraints may prevent you from investing in extensive marketing campaigns or approaching costly marketing platforms. Resultantly, you may be unable to tap into your target market efficiently.
Sometimes, you also fail to target the right audience; consequently, your marketing efforts don’t yield the desired results. And this happens when you fail to understand the marketing channels/platforms where your target audience is most active and accessible.
Strategies to solve marketing problems
To solve your marketing problems, you should know your target audience and cultivate a marketing strategy that aligns with your marketing budget.
You should also stay updated about the shifting market trends and adapt your strategies accordingly. Furthermore, leverage various social media platforms to increase your brand visibility and recognition.
Lastly, you must have competent resources to lead your marketing and advertising efforts to effectively navigate these challenges.
5. Issues Related to Cash Flow
As a small business owner, you may face cash flow limitations and struggle to meet your financial obligations and cost of operations. These problems arise due to delayed customer payments, unforeseen expenses, and irregular sales. Cash flow issues also occur when your company cannot secure a loan or investment due to imperfect credit history and lack of collateral. Nevertheless, you have to pay the suppliers, invest in development projects, and pay salaries to ensure business survival.
Solutions for cashflow problems
You can tackle cash flow problems by effectively managing your account receivables and negotiating more flexible payment negotiations with suppliers.
You can also try strategies such as discount deals and coupons to convince your customers for early or advance payments. But most importantly, you must maintain a contingency fund for emergencies, like low cash flows, to keep your business afloat.
6. Expanding Customer Pool
This issue isn’t only encountered by small businesses. Even major companies such as Apple and Samsung are compelled to put in all efforts to attract and retain new customers instead of waiting for them to discover their brand. However, expanding the customer pool can be comparatively more challenging for small businesses.
To get more customers, you must innovate your market offerings. Even if you sell the most innovative products, brand awareness is crucial in attracting more customers and expanding your consumer base.
Conclusion
Running a small business in today’s dynamic and competitive era is no easy feat. As a small business owner, you’re constantly striving to beat the competition, which often comes from large industry leaders. Nonetheless, you may poise your venture for success by offering employees attractive benefits, focusing on cashflows, and tackling marketing and advertising issues.
