Small Business Challenges

Small Business Challenges – Starting a business is a big accomplishment, but keeping it running is often a challenge. Small businesses have issues that aren’t readily apparent when planning your start-up. We’ll look at the 5 biggest challenges in this article.

Client Dependence

If a single client makes up more than half of your income, you are at a significant risk of going under if that entity falls on hard times or if you lose the them to your competition. Diversifying your client base is vital to growing a business, but it can be difficult – especially when the client in question pays well and on time.

Hiring contractors allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. All of that risk is transferred from the company to you and your employees. This can work out fine provided that your main clients have a consistent need for your product or service. However, it is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying.

What can you do? Recession Proof Your Business

Cash Flow

Being able to pay the bills is a big priority for businesses and individuals. If not, a deficit in one area will likely become a drain that puts pressure on the other. In order to avoid this problem, small businesses owners must have alternate capital resources or be able to pick up extra income to shore up cash reserves when needed. This is why many small business owners work a job and build their business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible. Money management becomes even more important when cash is flowing into the business and out to the owner. Handling business accounting and taxes may be within the capabilities of most business owners, but professional help is usually a good idea. Bookkeeping complexity goes up with each client and employee, so getting help can prevent it from becoming a reason not to expand.

What can you do? Cash Flow Management Tips


The hours, work, and constant pressure to perform takes a toll on even the most passionate entrepreneurs. Most business owners get stuck working much longer hours than their employees. They fear that their business will stall in their absence, so they avoid downtime to recharge. Weariness can lead to rash decisions and even giving up altogether. Finding a pace that keeps the business humming without owner burnout is a challenge that comes early (and often) in the life of a small business.

What can you do? Entrepreneurial Fatigue Syndrome

Founder Dependence

If you get hit by a car, is your business still producing income the next day? A business that can’t operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and this dependence is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows. Meeting this
challenge is easy in theory – a business owner merely has to give over more control to their employees or partners. In practice, however, this is a big stumbling block for founders because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes.

What can you do? Resolving Founder Dependency

Balancing Quality and Growth

Even when a business is not founder dependent, there comes a time when the issues from growth seems to match or even outweigh the benefits. Whether a service or a product, at some point a business must sacrifice in order to scale – this may mean not being able to personally manage every client relationship or not inspecting every widget. Unfortunately, it is usually that level of personal engagement and that attention to detail that makes a business semi-successful. Therefore, many small business owners often find themselves tied to these habits to the detriment of the company’s growth. There is a large middle ground between shoddy work and an unhealthy obsession with quality, so it is up to the business owner to navigate the company’s processes towards a compromise that allows scale without hurting the brand.


The Bottom Line

These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. We’ve looked at some things that can help make these challenges easier, but there is no avoiding them. An important step in overcoming a challenge is knowing the size of that challenge. Besides, a competitive drive is often one of the reasons people start their own business and every challenge represents another opportunity to compete.

Original artical at