5 Common Small Business Challenges and How to Tackle Them

As the owner or manager of a small business, whether it is a massage therapy practice or day spa, you are a member of a special group in the U.S. economy. The U.S. Chamber of Commerce reports that there are 33.2 million small businesses in the United States, which account for 99.9 percent of the total businesses. Adding to their significance, small businesses employ some 61.6 million U.S. employees or 45.9 percent of the American workforce. [1]

 

While the numbers indicate the significance of small businesses to the economy, there is no guarantee of their success. In fact, per data from the U.S. Bureau of Labor Statistics 18 percent of small businesses fail within their first year, while 50 percent fail after five years and approximately 65 percent by their tenth year in business.[2]

 

The data indicates that despite the enthusiasm for owning your own business, there are many challenges. Some challenges are shared by large companies, and others unique to the small business owner. Some you already may be experiencing; others looming as your business grows. Understanding what contributes to small business difficulties helps you to tackle them head on to avoid setbacks or failure.

 

Understanding top small business challenges

 

Cash flow

Among the most significant small business challenges is cash flow, though not unique to smaller companies. A problem with cash flow leads to other difficulties, such as paying vendors, who may add late payment fees. Erratic cash flow can make it more difficult to secure financing, if you need to grow the business or obtain needed equipment, which can be expensive. The domino effect may result in loss of clients and a mark on your business reputation.

 

Cash flow problems may not necessarily be of your making, either. While overspending can be a culprit, you may be feeling the effects of inflation. Everything you need to run the business costs more and clients may scale back the frequency of treatments or add-ons and retail purchases. Adjusting your expenses and thinking of new ways to market your services, including offering promotions, can help. And aim to have cash reserves on hand. Look at your expenses and try to put aside money incrementally each month to build up a reserve for expenses, ideally three to six months.

 

Talent acquisition and retention

Hiring top talent is a challenge for companies of all sizes, but it is an especially difficult problem for a small business owner. An influx of Gen Z professionals who have set higher expectations for purpose-driven work, flexibility and career growth opportunities make the hiring landscape highly competitive.  Attracting and retaining skilled workers is a competitive advantage.

 

To respond to the challenge, small businesses want to consider offering flexible business work options to expand their talent pool. A commitment to an employee’s development by investing in training can be a strong incentive to keep an employee committed to your business. And of course, you need to offer a competitive salary and benefits, which in addition to health plans and retirement plans, can include non-monetary benefits like a discount on services for family members or subsidizing membership in a health club.

 

Customer acquisition

Client acquisition is essential to growth. You may have a base of loyal clients, but circumstances change, and they may move on. Acquiring new clients requires ongoing marketing campaigns, which can be time intensive, which is a challenge when you are juggling other tasks.

 

You will want to consider your approach to client acquisition and if the budget allows bring on additional help, even contractors, to reach out to prospects. In addition to email marketing, engaging on social channels, and even traditional print advertising, other ways to market include:

 

·         Cross-promote complementary services: Collaborate with complementary businesses, such as health clubs, hair salons, yoga studios and activewear clothing stores. Create a plan whereby you provide content that partners can use in their social channels to promote your offering and vice versa.

 

·         Participate in local charitable events: When you are thinking about how to get clients, do not overlook the opportunity afforded by participating in local charitable events. For example, offer neck and/or foot massage for free at a local run or walk or other not-for-profit event where such services would be appropriate. By participating with not-for-profits you gain exposure for your professional expertise and build good will in the community through volunteerism.

 

·         Roll out a referral plan: Referrals are a powerful way to validate your value proposition. No matter what you say about your great service, it is always more credible when someone else is talking you up. Do not be shy about asking long-standing clients for referrals. Your best clients are fans. They want to see you succeed and are happy to help spread the word about you to their network.

 

·         Ask for reviews: Never underestimate the importance of online reviews when it comes to how to gain clients. Reviews help consumers make decisions about products and services and build trust for brands. They also help a business build on its online presence. Do not be shy about asking clients to give you a review on Google Business, Yelp, Facebook, or other sites you may use for reviews.

 

Customer satisfaction

Getting new clients is one challenge. Another problem of small business is keeping current clients. Satisfied customers mean repeat customers, increased word-of-mouth promotion, and excellent customer feedback. On the other hand, an unsatisfied customer can lead to negative implications such as fewer sales, fewer referrals, and bad press. You can perfect customer with these steps:

 

·         Learn to listen: Never make assumptions about what the client wants. Ask and listen attentively to their answers as well as observe non-verbal cues.

 

·         Personalize the experience: When you recommend a treatment or retail product, talk about how it meets a client’s needs.

 

·         Live up to promises: When clients express their expectation about a specific treatment, be direct and honest about your ability to give them what they want. 

 

·         Anticipate needs: Get to know your clients. Over time, you will be able to anticipate their needs and preferences.

 

·         Deal with complaints: It’s true that you can’t please everyone, but if you pay attention to the complaint, you may be able to build a better relationship with clients rather than lose them. 

 

·         Be responsive: Not every client is satisfied interacting with your business via the Internet. Some need that personal interaction that comes with a phone call.

 

Time management

Among small business challenges is ineffective time management, which can result in missed opportunities, wasted resources, and employee frustration. If you are feeling overwhelmed and continue to put off projects that could move the business along, consider the following:

 

·         Manage interruptions: Interruptions are a reality of the workplace, whether employees need answers to questions, vendors come by or call to offer new products or check on current supplies, or clients call to change appointments and keep you on the phone with other questions. You cannot put everyone off, but there are ways to manage interruptions. For starters, do not constantly check your phone or computer for messages. Set aside times in the day to check. Close the door to your office and indicate to staff you need uninterrupted time unless the need is urgent. Ask vendors to send information ahead and arrange times in person or on the phone to talk.

 

·         Learn to delegate: Remind yourself that you do not need to do it all yourself. Delegate to staff or find outside resources, where necessary

 

·         Prioritize: Make a list of tasks and projects. Keep in mind that not everything that crosses your desk is something you must deal with immediately. Next, set limits on yourself to do the most important things each day.

 

·         Scale back commitments: There is value in participating in industry organizations and supporting not-for-profit organizations that raise the profile of your business. But outside commitments can become so great, they begin to impinge on time needed to run your business. Be selective about what you take on outside your business so that you have the time and energy to run your business as efficiently and profitably as you can.

 

Understanding these common challenges can better prepare you as they emerge so you can continue to move your business forward and meet the goals you set.