Small business ownership is risky as many small businesses fail. Knowing what hurdles to overcome and understanding common pitfalls can help owners avoid any negative consequences and ultimately help them flourish. The following are common hurdles that small business owners potentially face when maintaining their business:
A business needs initial capital to get started, as well as a constant cash flow to continue operations. Sometimes, unforeseen circumstances, such as the current pandemic, can create a shortage of capital. Small business owners need to have contingency plans in place for generating cash to keep their businesses going. It is important to keep in mind that a large initial investment may not always be a good idea, as this may lead to mismanagement of funds and waste. Keeping operations lean may be a good way to minimize waste and focus on the main business goals.
Nevertheless, no matter how lean operations are, emergency situations and unforeseen circumstances are part of owning a business. Sometimes, the sudden need for cash arises. If a business owner is unable to secure funding in a timely manner, they risk losing the business. Business owners must utilize all means of securing capital and explore alternative methods of doing so, such as crowdsourcing. Lately, crowdsourcing apps and other fundraising platforms on social media sites have increased; other potential sources include grants from various organizations, local governments, and entities designed to serve small business owners.
A business cannot grow without customers. It is important to provide products and services that are of highest quality that meet and exceed standards. Customer reviews can generate new customers and utilization of social media outlets can be a cost-effective method of generating additional business. Other avenues for reaching new customers include using social media advertisements on Facebook and Google. Once customers purchase a product or service, a business can save costs by converting them into a long-term purchaser and building their brand loyalty. This can be achieved by providing rewards, membership benefits, and premium services.
For a business to succeed, it needs workers that are skilled and customer conscious. A business owner should provide leadership and strive to create a positive work environment that prevents a toxic work culture through policies that are equitable, and merit based. By offering competitive salaries and benefits, owners can ensure employee loyalty, retention, and a good work ethic.
Having an organized manner of accounting of all company financials is of utmost importance to monitor a company’s financial health. Utilizing invoicing and accounting software to keep track of payments and disbursements can provide a seamless way of tracking outstanding revenue. Furthermore, accounting software can increase awareness of company expenses so that actions can be taken to minimize wasteful practices.
Owners must comply with federal and state regulations regarding employment and other taxation. Misclassification of employees or harassment complaints can lead to fines and lawsuits. Owners will have to divert financial and time-management resources to fight these battles. It is crucial that owners know and understand regulations and have compliance practices in place.
Small business owners are most vulnerable in a crisis; if an owner is not disciplined with their finances, they may risk losing all their investments. The legal team at MacMain, Connell & Leinhauser aids on a wide range of services related to small businesses, including ongoing operations and day-to-day compliance requirements. For more information regarding these services, please contact us online or call us at 484-318-7106. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.