The saying “it takes a village” is not just applicable to raising kids, but also to supporting small businesses. According to the U.S. Small Business Administration, small businesses make up 99.9% of all businesses in the nation, with 30.7 million different businesses and 59.9 small business employees. With so many small businesses contributing to the United States market economy, it is crucial to look at the unique challenges the owners and employees face while building their own brand.
1. Budgeting and Cash Flow
Funding is one of the first challenges businesses face and it continues to be throughout the life of the business. The nature of small businesses is that there may not always be a steady cash flow to keep the lights on and to run everything smoothly like a larger business relies on. For instance, if a few clients fail to pay their bills on time, that could seriously hinder an owner’s ability to make payroll.
Lack of funding also hinders a business from having the ability to adapt to changing environments. For example, during the coronavirus pandemic, most businesses had to switch to a virtual workforce. However small businesses who already have a tight budget may not be able to pay for digital equipment to keep up with the demands of the pandemic environment. Additionally, the ever-changing marketing, advertising, and marketing environment can put a crunch on small businesses who have less marketing dollars to compete with larger companies.
2. Government Regulation
In 1996, Representative Jim Saxton, Vice Chairman of the Joint Economic Committee of the U.S. House of Representatives, acknowledged that small businesses are disproportionally hurt more from government regulations. “For instance, if all companies pay $1,000 to comply with a certain regulation, the costs per employee for a firm with 10 people are much higher than an organization with 1,000 people.” Thus, the regulation cost could stunt the small businesses’ growth capabilities, as their revenue goes into the pockets of government agencies rather than investing in their business.
According to the U.S. Chamber Foundation’s Small Business Regulation Study, in the past twenty-two years, federal agencies have published more than 88,000 regulations. Of these final rules, 15.458 regulations are concluded to have a negative impact on small businesses. These regulations can include anything from the tax code, environment regulations, employment and labor laws, state licensing, and antirust regulations. When considering starting a new business, make sure to research the business environment of the region and how local, state, and federal rules will regulate your small business.
3. HR and Employment
In 2019 alone, small business employees accounted for 47.3% of all employees in the United States, averaging about 59.9 million personnel. Despite these large numbers, small business owners are constantly struggling with hiring qualified new employees. Small businesses are forced to compete with large corporations to entice employees to work for them. Despite less cashflow than a larger business, small businesses need to provide great employee benefits, additional bonuses, and the availability to move up the ladder to capture potential employees’ interest in working for them. However, in many cases, small businesses’ employee packages may not be able to compete with large corporations’ benefits, adding to the trouble of finding and hiring the right employees.
Small business owners have a vision for their company and have often set expectations with customers for a certain level of service or product excellence. It may not be well known, such as Chick-Fil-A’s famous mission statement to be a faithful steward and bring a positive impact on anyone who encounters a Chick-Fil-A, but it is still the personality of the business. The chicken franchise hires employees who already understand the expectations and values of the corporation. However, a small business will need to have the ability and resources to hire and train individuals willing and motivated to learn and carry out the owners’ mission for the business. All of these factors, while ensuring employees are happy and productive, make hiring and retaining employees a challenging endeavor.
4. Stress and Fatigue
Running a small business means there are less hands-on-deck to help with the business’ demands and keeping up with clients needs. Owners and their employees can easily get stressed and fatigued when there is a constant heavy workload with no one to help bear the burden. The constant pressure of managing workflow with less employees can be draining. Ultimately, exhaustion can catch up, leaving the workplace disorganized, forgetful, and ineffective.
5. Growing the Client Base
One of the joys of owning a small business is the “regulars.” Whether that is knowing a customer’s coffee order, a shopper’s clothing style, or client’s tendencies, it is a great feeling to know you have made a connection with someone who values your business. While regulars are the lifeblood of a small business, it is also important to grow your client base which can be challenging. For small businesses that are not a household name, brand awareness can be hard to promote. Figuring out how to allocate the business’ resources to carry out marketing and advertising plans are key to finding new customers.
To counter this challenge small businesses can look to what larger companies are doing and recreate in a more budget friendly way. Other ideas could be exchanging referrals, developing an engaging web presence through social media, and blogs, and encouraging customers to review your business.
6. Staying Relevant
Along with the marketing aspect, small businesses also need to stay current with today’s trends that are dominating the market. Falling behind on the latest trends means customers may think a business is out-of-touch or not relevant in today’s market. Since most small businesses cannot devote a large portion of their budget to product or services development, marketing and advertising, or image and branding, they may fall behind on the trends. By being aware of what is going on outside their physical business, small businesses can meet clients’ changing demands. For instance, when the coronavirus pandemic hit, most, if not all, restaurants adapted to either a take-out or delivery method to make their food accessible in a safe and profitable way. Just like the larger restaurant chains, small mom-and-pop restaurants modified their business to meet the current environment.
Researching local events, learning about trending Twitter hashtags, and creating Google Alerts will help small business owners to stay current and understand what the market is demanding. By being complacent, small businesses can struggle to be relatable to their customers and fail to meet their expectations.
Every business, no matter large or small, will face challenges and setbacks at some point. Its not about how hard they fall, but how fast they can get back up on their feet. Fortunately, The United States has an entire agency dedicated to advocating and supporting small businesses. The Small Business Administration is a great tool to learn about new resources to plan, launch, manage, and grow a business.
Starting a business takes tenacity, determination, and a strong work-ethic. At DYE CULIK PC, we commend all small businesses, but especially those in our hometown, Charlotte, NC. Our attorneys represent small business owners and franchisees for everything from starting a business, to buying or selling a business, or even disputes and litigation with competitors, employees, and customers. If you need help or legal advice for your small business, you can give us a call at 980-999-3557. Also, follow us on Instagram for the latest updates on CLT small businesses.