PROBLEMS: 1) Recruitment & Retention, 2) Inflation & Price Increase, 3) Lack of Capital / Cash Flow, 4) Supply Chain Issues, 5) Marketing & Advertising.

Introduction: Many dream of becoming a small business owner as it offers more independence, autonomy, & creativity. The fact is, some small businesses always thrive — no matter the situation. How? The key to success is setting up reliable systems and adapting to the current economic landscape.

Let’s face it. The last few years have been particularly challenging for small businesses — a Global Pandemic, supply chain disruptions, inflation, and economic uncertainty. These events have all reinforced a constant in small business life – the need to be flexible and adapt your business decisions to succeed.

Now, more than ever, it’s crucial to review the most common small business challenges and, most importantly, to strategize methods to overcome them. An organized, prepared business owner who knows about potential challenges that could impact their business operations is far more likely to overcome them, survive & succeed.

Top 5 Common small Business Problems & their Solutions

Here are the biggest challenges identified in a SBA Small Business Trends report – an annual survey designed to provide small businesses with data trends and insights. With each challenge, we’ll offer effective solutions to help you not only survive, but thrive. The economy may be delicate today. But with planning and the right attitude, you can still achieve your small business dreams, provide exceptional customer experiences and satisfaction, and become a very successful company.

Here’s a list of the top challenges identified by small business owners in the latest Small Business Trends report to help you identify and solve common challenges

#1. Recruitment & Retention

While last year’s report found labor quality issues such as employee recruitment and retention challenges were a major factor for small business owners, 2023’s report found those same challenges are still around but easing up a bit.

In fact, there was a 16 % drop in business owners who feel staffing is a significant issue from last year — suggesting that more small business owners have a positive outlook and more success in hiring new employees. Many small businesses also plan to increase their staff this year, focusing on growth and demonstrating optimism.

SOLUTION: Increase Compensation and find high Quality Employees.

To keep the recruitment and retention challenge from becoming a larger issue, increase your employee compensation and take the time to find top quality workers. If you’re looking for help with recruitment, you can reach out to Recruiters – which help small businesses hire skilled and more affordable talent to compete in a global world.

To retain employees, small business owners added better benefits to make their small businesses a coveted workplace. The cost of Health Insurance plans is a factor for many people seeking employment, so ensure your benefits are as robust as possible.

Employees also like to feel valued and appreciated. If they do, they develop the loyalty that drives higher productivity and longer retention. To keep your employees happy, you can practice regular employee appreciation strategies, such as Employee of the Month or Gift Card rewards. You can also develop promotional paths or perks for your top-performing employees so that they will benefit from company growth. Showing your employees that you value them will go a long way in keeping them around — and helping your business thrive !!!

Remember, your employees influence your Customer service & satisfaction. Labor costs are high these days, so hiring poor employees can be costly. It’s also essential to retain employees once you’ve hired and trained them, especially today – when fewer applicants are in the job pool. When employees leave, it can drain your efficiency in two ways: you lose their work output, and your own is sapped by the time needed to recruit a replacement.

#2. Inflation & Price Increases

Along with recruitment and retention, inflation tops the list in 2023 as a top concern for small business owners. The U.S. is experiencing a significant cost rise with an 8.6 % increase in the Consumer Price Index (CPI) from May 2021 to May 2022 — the most significant increase since 1981. But the U.S. is not alone, as 60 % of economies in the world are also grappling with rising inflation.

With inflation driving up the costs of goods and services, starting a business this year is more expensive than in previous years. Many small business owners also fear a looming or ongoing recession today, making them more hesitant to take the next steps.

When it comes to inflation, survey respondents said increased prices (27%), revenue loss (15%), & higher wages (13%) are the top three (3) impacts. Supply chain issues (6%) were also to blame for negative financial impacts on their businesses. A small portion of business owners responded to inflationary pressures by cutting their own wages (7%) and reducing their budgets (6%) to reduce the impacts of inflation. But, the news is not all bad: a majority of small businesses surveyed reported profitability this year (66%).

As you can see, not every small business is impacted by inflation in the same way. Some are heavily affected, while for others, it’s a minor inconvenience.

SOLUTION 1: Finance a Franchise.

Smart business planning is the key to staying afloat during fluctuating market conditions. If it’s a tougher year to start a business from scratch, that doesn’t mean starting a franchise is the same. In fact, franchise ownership has become more popular recently. Advantages: 1) proven business model, 2) existing loyal customer base, 3) ongoing support, & 3) training are especially attractive for aspiring small business owners ready to make the leap.

In 2023, Franchises won: 35 % of new businesses were franchises, as opposed to new, independent businesses at 21 % — showing the rise in small business franchising.

SOLUTION 2: Reduce your Expenses

The rising inflation can be challenging for many small businesses. And cutting expenses can be the most effective way to help offset those challenges.

The challenge of Inflation is as an opportunity to closely review your service contracts, supplier costs, subscriptions, and other expenses to determine what’s necessary (and what your business could do without). Negotiating the price or finding cheaper alternatives is another way to save.

#3. Shortage of Capital / Cash Flow

With inflation on the rise, the cost of starting a new business may cause sticker shock. For most small business owners surveyed in 2023, their startup costs Categories were:

1) $250k to $500k (27%),
2) $500k to $1Mill (16%).
3) $175k to $250k (15%),
4) $100k to $175k (15%),
5) $50k to $100k (11%).
6) less than $50k (3%)

But even with today’s economic challenges, Americans created over 10 million new businesses this year — so take heart and keep reading – for what you can do to offset your lack of capital and cash flow.

SOLUTION 1: Get Smarter Funding.

Many entrepreneurs and small business owners think of Loans and other funding methods when considering their access to Capital and Cash Flow needs. But Loans can be hard to secure —and bind your business with long-term debt. The percentage of loans approved by the Small Business Administration (SBA) is still relatively low. Your credit, assets, and prior business experience influence SBA Loan approvals.

Good News. Other funding strategies can work well in today’s economic climate. Rollovers for Business Startups (ROBS) allow you to access your 401(k) and other Retirement funds to finance a business. Other options include Home Equity Lines of Credit (HELOC), where you can access existing equity in your home. Remember, you have options for financing — and it’s not a one-size-fits-all situation.

If other business challenges are stressing your Capital & Cash flow situation, you can also get creative with your solutions. Think about ways to pivot your business so it fits into a popular sector today. Some industries are even considered recession-proof. Ask us.

SOLUTION 2: Prioritize Cash Flow

Consistent cash flow is especially crucial for small businesses today, and improving it can be achieved by encouraging Clients to pay faster, offering early payment discounts, or requesting upfront deposits for larger products or services. These strategies can help small business owners manage inflation and keep their businesses running smoothly — plus give them an extra cushion in case of further economic fallout (ie, Recession)

#4. Supply Chain Issues

Not surprisingly, the fourth-largest small business problem in 2023 is Supply Chain issues. This won’t come as a shock to many – who recall the Supply Chain woes of the last few years.

The Global Supply Chain Pressure Index, which is influenced by logistics variability, fell to its lowest level since November 2008 in March 2023. Despite this, the Supply Chain team is facing challenges due to low visibility and high uncertainty, making it difficult to drive your business – uphill to more income. It’s premature to assume that the three-year period of supply chain disruption has come to an end.

SOLUTION: Shop in Bulk & be Flexible.

According to Forbes, you can take practical steps to overcome this issue — or at least make it easier to work with. Here are a few ideas you can try:

Watch your Inventory. Know what you need and what you’re running low on — as it’s not as easy right now to get a quick shipment.
Boost your Inventory. Follow along with the coupon-clippers and bargain shoppers and buy in bulk when you can and buy extra products or material, too.
Find Alternate Products. If the product you need is running low, perhaps there’s another option you can try that would wok just as well.
Be Forthcoming. Tell your loyal customers you are running into supply chain issues so that they know. It can be as simple as a caveat on your website or an Email that says they can expect delays. Just don’t surprise & disappoint your customers when something is unavailable.

#5. Marketing & Advertising

No matter what’s going on in the market, potential customers need to know about you for your small business to be successful. This is where Marketing and Advertising come in as the fifth most cited business challenge in the 2023 Small Business Trends survey. Looking ahead, a significant amount of small business owners surveyed (28%), also plan to invest in traditional and digital marketing this year.

SOLUTION: Define & Outsource.

Marking and Advertising are how you get your business name out there to get the best customers. For larger companies, an entire team may work toward this goal. For smaller businesses, you need to be creative with your resources.

With more people working from home today, Digital Marketing & Advertising are common. You can further target your customers on Social Media channels like LinkedIn, Facebook, and Instagram.

Creating a helpful, user-friendly Website is another smart way to stay ahead in your Marketing & Advertising. You’ll want to perform Search Engine Optimization (SEO) on your website and any articles you post on your Blog (if you have one), so your Target Market can find you quickly and easily. Developing Buyer personas can also help you tailor your marketing efforts and maximize your strategy.

Our Solution to all 5 Problems

Get a Little Extra Help from the Pros like us !!!

As you can see, it’s been a challenging year for small business owners. Still, their optimism and resilience have shined throughout it all —and many are optimistic about the future of small businesses.

We are Dedicated to Helping you !!!

If you’re a small business owner or thinking of becoming one.

We have experience with the challenges mentioned above and can help you with solutions like: 1) funding, 2) business structure, and 3) other pressing business issues. Plus, we can support you throughout the lifetime of your business and when you need help with other services, we can help save you time and money.

We provide Coaching & Mentorship through every stage of your business’s life, so don’t let today’s challenges get you down.

Top 5 Small Business Problems & their Solutions