There are numerous challenges a small business must overcome to remain operational and thrive, from staffing concerns to developing a viable product and more. Many such obstacles may seem impossible to surmount, especially if they appear out of the blue and you are completely unequipped to deal with them.
However, that does not necessarily spell doom and gloom for your business, as some hurdles can turn out to be blessings in disguise. These six entrepreneurs share some of the biggest challenging situations they have faced and how they were able to find the positives in them to protect their businesses and drive future growth.
An Overnight Revenue Drop
"Early in our business, we woke up one morning to find that our ad revenue had fallen by nearly 50 percent. As that was one of our largest revenue sources at the time, we got nervous," says Justin Faerman, co-founder and editor-in-chief of Conscious Lifestyle Magazine.
The key, according to Faerman, is to keep calm and start working toward a solution right away: "Instead of going into a panic, we actively began looking for new ad providers and found one a few days later -- that ended up making us twice as much as we were making before. We learned that every breakdown is a breakthrough in disguise."
A Three-Year Tax Audit
Perhaps one of the biggest hurdles a small business can face is an unexpected and comprehensive tax audit. "When my small business got a letter from the IRS announcing a three-year audit, I panicked a bit. I had just joined the business and two of the years were before I got there," says Monica Snyder, CEO of Birdsong.
The situation can feel even more dire if your books are not in order, but that can ultimately serve as a lesson to implement better accounting systems. "We learned that our accountants didn't fully understand our business models," she says. "We made it through the audit, replaced the accountants and put much better financial systems in place to ensure it doesn't happen again."
Unreasonable Employee Demand
Sometimes, the challenge your business is facing comes from within. "We had a manager at the center of a lot of operations at the company who had an unreasonable demand that forced us to part ways," says Ryan D. Matzner, co-founder of Fueled.
Luckily, the situation helped Fueled rethink some of its operational approaches, which led the company to its strongest period of growth yet. "Don't let key employees hold you hostage -- be willing to charge headfirst into a messy situation," Matzner advises.
Relying on the 'Big Whale'
Losing a client, especially a big one, is always devastating for a business -- even more so if they accounted for most of your revenue. DevriX CEO Mario Peshev explains: "Early on, we had a client paying 80 percent of our revenue. Needless to say, the business relationship has ended, and we were left high and dry."
After a tough couple of months, DevriX secured two retainer contracts and has been scaling ever since. "Nowadays, 95 percent of our revenue is retainer-driven and no client represents more than 15 percent of our revenue," Peshev adds.
A Client Not Paying Their Invoice
While losing a client is difficult, there is almost nothing more frustrating than never being paid for services rendered. "I was stunned when we had our first client that simply didn't pay their invoice," says Joel Mathew, CEO and founder of Fortress Consulting. "I was outraged that we had provided a service and they had ignored their end of the deal."
Mathew used this experience to protect the company against future clients with nefarious intentions: "Getting burned on billing and collections ended up being a good thing for us, as we were able to strengthen our accounts receivable policies along with our legal agreements to make sure it never happened again."
Working Yourself Too Hard
"Years ago, I was told that the 'early bird gets the worm' and 'the secret to success is to word hard,'" reveals Charles E. Gaudet, CEO and founder of Predictable Profits. "I set my alarm for 3:30 a.m. and worked seven days a week. Eventually, the lack of sleep caught up with me and I ended up in the ER."
While nearly every startup founder has heard similar advice about working hard, it shouldn't come at the cost of your health. The key, as Gaudet learned, is to work smarter, not harder: "It forced me to think in terms of optimizing my efforts and building smart systems. In the next 12 months, we hit a new revenue record."