Starting a small business is a challenge in itself. Before getting started, you have to get your market and business research and plans together. You need to map out your monetary resources and make certain you are covered for at least the first year. These are all normal challenges of starting a small business. Let’s take a closer look at some other challenges which may not be so obvious. Nine out of ten startups fail within the first 5 years. Close to 50% fail within the first year. Take the time you need and make certain you have enough capital to run your business for some time without a profit.
The market doesn’t support the small business’ product or service. Many great ideas funnel into a small business. If you didn’t do the research into the area, you started your business in, you may find that there is not enough demand for your product or service to be profitable. At this point, there is little you can do to create a market for your business.
Lack of money can kill a small business in two seconds. It is not always possible to have the monetary funds to operate for a year, but it can still be possible to get your small business over the hump. That is the chance all small businesses take in the beginning. A better plan is to have enough to operate for at least the first year and don’t expect a profit in that first year. Building your brand and marketing your product can take some time in the area where you operate. Plan on it.
Too much competition can be too much for any small business. In this environment, many small businesses fail. It takes time to get planted and recognized, and too much competition can make it next to impossible. Do your research on your potential competition before starting and save yourself the headaches of too much competition.
The small business did not become a legal entity. Joe Doe’s Handyman services sounded like a great idea. Joe was getting gigs on marketplace and craigslist. He never filed the proper paperwork, nor did he have the proper insurance to run his business. There is an accident on the job and Joe gets sued. Not only is Joe’s small business in a lot of trouble, but so is Joe. Small businesses like a handyman service need to be legal with the proper paperwork and insurance. It is mandatory in all states. Unless you plan on running a sole proprietorship using your own name and social security number with business insurance, then you should think about a corporation or an LLC. Even with a sole proprietorship, you can be help legally responsible for all business debts.
Hiring the wrong employees. Hiring good reliable employees is a must if you need employees to help run your business. Often time, a business owner might think it is a good idea to hire his best friend for a position at his new company. The problem with this scenario is that the friend may not be qualified enough or could become lazy. It is difficult for a business owner to fire his good friend. This causes a problem in service or production of product. Generally, if you do not thoroughly screen potential candidates, you may end up with an employee who says they can do the job, but really can’t. Fake it until you learn it doesn’t always work.
Not taking advantage of available resources. There are many resources available for small businesses such as small business loans and grants. Be sure to take advantage of available resources. New companies run into money issues more frequently in their first year. They usually don’t take advantage of available resources and end up in the first year wastebin. Don’t be another statistic.
Creating a good solid business plan, doing the necessary research, getting your business legal, and planning on no profit for the first year can help your new small business conquer the early hurdles almost all small businesses go through. You can be just as successful as other small business owners in your area by avoiding the common challenges of starting a new business. This will give your new business an edge over other small startup companies and pave the way for your future success.