Being a small business owner is one of the most rewarding career choices you can make. You get to make your own schedule, be your own boss, and make all the crucial decisions about your brand that you could ever want.
However, with that reward comes great responsibility, and many challenges along with it. In this post, we’ll talk about five of the most pressing challenges small business owners face during their first year of operation.
For many, the first year is truly sink or swim. It is when you see how well your business concept does out on the marketplace, whether customers and clients are interested in your idea, and whether your projections for revenue pan out the way you’re hoping.
Check out these five challenges to find out what you’re likely to face during your first year of business. As a bonus, we’ve included a handy solution for each challenge, so you can stride into the business world with confidence, knowing you know just how to handle each challenge.
Challenge 1: Securing funding
Your first challenge as a small business owner is securing funding to get off the ground. If you’re like most people, you probably don’t just have a few hundred thousand dollars lying around to put toward finding a rental for a storefront or other facilities, employees, advertising, and product.
That means you’ll likely be in the market for a small business loan, or investors who see promise in your budding business.
If you’re scratching your head wondering where you’ll be able to secure the funding you need to turn your dream into a reality, consider looking into these sources:
- SBA loans: the federal Small Business Administration offers competitive, low-interest loans to small businesses that fill out their application. These can be difficult to secure, so be sure to be proactive about seeking one out if you do.
- Bank loans: banks may also offer loans to small business owners looking to gain their footing. Speak to a local bank representative to find out more about interest rates and terms for borrowing.
- Investors: some businesses, if they show promise, may entice investors who think they may be able to make a profit once you start booming. If there are startup incubators or other similar resources in your city or town, this is a great place to start looking for hungry investors.
Challenge 2: Building brand recognition
When you’re brand new on the scene, and people in your industry haven’t gotten word about your new business yet, building brand recognition can be a hurdle.
Once you’ve secured funding, your next goal will be to start bringing in revenue; you want to get started paying back that loan, or rewarding investors. Brand recognition is essential for that.
Brand recognition is especially difficult in a world so saturated with startups and highly-recognizable brand names, like Target, Amazon, Apple, or Toyota. Don’t be discouraged, there is a solution. Start by considering your audience.
If you’re a small cafe, it’s simple: the people in your locale who are avid coffee-lovers. An Instagram page, Facebook account, and simple flyers will probably be enough to get the word out about your opening.
If your business makes the perfect pair of hiking pants and related accessories, you may need to consider finding the right way to market your message to a broader audience.
Many startups selling clothes and similar consumer goods find that targeted Instagram, Reddit, Twitter, and Facebook ads are a profitable way to get the word out about their brand.
Consider partnerships with these social media sites as a way to cast a wide net. You can also make partnerships with influencers, whose personal touch lends credibility and authenticity to your brand identity.
Challenge 3: Customer/client retention
Retaining customers and clients can be a challenge when there are so many other competitors out there.
You don’t want to dissuade valuable customers from using your service or buying your product again, and simple mistakes can often lead to clients seeking out a new company to do business with.
There are creative, clever solutions available for client retention, however. Depending on your small business’s goals, your exact strategy may differ, but one thing they all have in common is rewarding customers for their loyalty.
For instance, say you’re the cafe owner mentioned above. Stamp cards — or virtual stamp cards — can be a simple solution. Once a customer’s stamp card is filled, they can return for a drink on the house.
If you’re a business-to-business company (B2B), rewards can look a little different. Maybe you offer discounts to clients that keep coming back for business. Or, those that stay signed year after year may be offered some free bonus service.
Either way, the point is the same: communicate clearly to your customers and clients that, if they stick with you, it’s only going to get better.
Challenge 4: Scaling up
Your next challenge is scaling up. Many businesses need to stay hungry to survive. Cafes, restaurants, and boutiques can often get away with keeping a steady customer base, but don’t expect any raises for you or your employees if you stay satisfied with a smaller operation.
B2B operations and professional services especially need to keep a growth mindset, as failure to expand are often seen as a sign of poor performance in the business world.
Even remote work should try to scale, especially for smaller freelance operations whose revenue streams depend on consistently finding new clients.
Scaling up is challenging, but there are solutions:
- Work with a consultancy, who can professionally tailor a business plan to fit your scaling needs.
- Look for new markets that you can tap into, then target advertising to them.
- Expand your brand-recognition game, reaching new clients through new and old communication channels.
Challenge 5: Finding a balance
Lastly, as a small business owner, you’re probably going to feel pretty stressed. If you’re held back by your own stress and anxiety, it can be hard to focus on your business’s needs.
That’s why finding personal balance is key; only once you’ve found your own personal balance will your business reflect that balance too.
Try out these solutions:
- Take a yoga class to learn about mindful breathing and exercising.
- Invest in your hobbies; remember, your business isn’t your whole life.
- Spend time with friends and family — there’s nothing more important in life.
No matter the hurdle, if you have the right mindset, tools, and solutions in hand, you’ll find a way to overcome it.rtup
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Samantha Rupp holds a Bachelor of Science in Business Administration. She is the managing editor for 365businesstips.com as well as runs a personal blog, mixedbitsmedia.com. She lives in San Diego, California, and enjoys spending time on the beach, reading up on current industry trends, and traveling.