When you're a small business owner, it's easy to feel as if the problems your organization faces are unique. You're so immersed in your daily duties and issues that you may fail to recognize that your major problems are essentially the same as what the competition is facing.
In 2016, several particular challenges are hampering the efforts of many firms. How you respond to these challenges will make a big difference in how successfully your business handles them.
The Seven Challenges You're Probably Fighting
This year is a pivotal one for small businesses in America, as is usually the case with an election year. Depending on which political party takes the Oval Office, we could see shifts in regulations and policies that will have either positive or negative impacts on businesses like yours
But there's no sense in worrying about what these may turn out to be yet. Instead, it's essential that you focus on the challenges that are currently in front of you.
Recently, Wasp Barcode Technologies surveyed more than 1,100 U.S. small businesses and produced a State of Small Business Report that supplies valuable insights into what's happening on the ground floor of the U.S. economy.
Though the data suggests a number of interesting things, perhaps the most interesting takeaway involves the distinct challenges that small businesses face in 2016. According to the numbers, the top challenges facing American small businesses in 2016 consist of: hiring new employees (50 percent), increasing profit (45 percent), employee healthcare (43 percent), growing revenue (43 percent), and cash flow (36 percent).
Take a closer look at these challenges -- and a couple of other pervasive ones -- in order to shed some useful light on issues you may be dealing with right now.
1. Hiring New Employees
Hiring new employees is a challenge many small businesses are having to deal with. Part of the difficulty relates to employee healthcare -- which we'll discuss in greater detail in a moment -- but it also has to do with the substantial costs of bringing new employees on board. According to one estimate, the total cost of onboarding -- taxes, benefits, equipment, training, bonuses, etc. -- can range from 1.5 times to 3 times the salary of the position. That's a significant investment for companies that are typically strapped for cash.
2. Increasing Profits
For small businesses with perhaps five to ten employees, increasing profits is the biggest challenge. There are any number of reasons, but usually it comes down to an inability to remain a low-cost leader against the competition (who may have access to better resources and economies of scale). The only answer is to innovate and optimize constantly and stay one step ahead of your competitors.
3. Providing Healthcare to Employees
The Affordable Care Act, popularly known as Obamacare, created sweeping changes in the employer-sponsored health insurance market. It was shrewdly promoted as a way to lessen employer issues, for many firms it posed a greater obstacle to small business growth.
Employers are expected to pass increased healthcare costs on to employees, which causes extra friction in the workplace. And if managers choose not to pass on the costs, they may dramatically reduce their own profits.
While Obamacare has been successful at extending health insurance coverage to many Americans who didn't have it before, some small business owners have caught much of the brunt of its downside.
4. Growing Revenues
Part of the difficulty with increasing profits is that many firms have found it hard to increase their revenues. The issue can't necessarily be explained by a single root cause, because revenue issues are generally specific to the business itself. As renowned sales expert Jim Keenan says, increasing sales revenue comes down to four things: strategy, structure, people, and process.
5. Managing Cash Flow
"Money problems in their various forms are top of most lists of company woes," says entrepreneur Tom Ewer, "and for small businesses the major worries are clients stalling payments, unexpected outgoings, and outstanding bills that won't wait to be paid."
The good news is that cash flow issues are largely curable. Product demand and healthcare regulations are far more resistant to control from inside your office walls, but cash flow can be dealt with. There are plenty of recent solutions designed to achieve better budgeting and invoicing. The key is finding one that fits your business.
6. Staying Energized
While it may not get as much publicity as fiscal challenges, staying energized and overcoming fatigue are also big problem areas for small business owners. "When the fatigue sets in, the weariness with the hours and the results can lead to rash decisions about the business, including the desire to abandon it completely," says content marketer Andrew Beattie. "Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business."
7. Avoiding Client Dependence
For many small businesses -- especially the ones that have fewer than 10 employees -- client dependence is a huge issue. If a business depends on a single customer for more than half its income, that should raise a huge red flag. If that's the case, the business is totally reliant on the client to stay operational and profitable. Diversifying your client base needs to be a priority if growth and stability are also goals.
SBOs: Keep Pushing Forward
As a small business owner, you face a number of distinct challenges that CEOs at large corporations and Fortune 500 organizations don't necessarily encounter. The good news is that you also have a distinct set of advantages. Because you're small, you're also much more agile and responsive to shifting circumstances.
Choose to focus on the advantages you have as a small business and leverage them in ways that empower you to overcome the challenges cited above. There are plenty of ways to get over these hurdles; you just have to identify them.