The Most Common Small Business Problems and Solutions

Starting and running a small business is a dream of many potential entrepreneurs. The problem lies in the fact that 9 out of 10 of these businesses eventually fail. Why? Well, mostly because they’re unprepared to face the challenges that lie ahead. Now, the first step in avoiding a trap lies in knowing that there is one, to begin with. The second step lies in understanding different types of traps that you’re dealing with and finding a way around them. Here are six such issues that you need to be aware of.

1. No market need for the product/service

The first reason why the majority of small businesses fail is that there’s simply no need for the product/service. This problem is not something that can be fixed subsequently. A major brand can artificially create a need for a product by overspending on marketing. For a small business, however, the best way to handle this issue is to avoid it from the very start. Also, remember that just because people say that they are interested in something, this doesn’t mean that they’re actually going to spend money on it. Thorough market research needs to be conducted prior to launch (and even fundraising).

Solution: Do proper research before you start with the execution.

2. Running out of cash

Another thing you need to focus on is the importance of having enough cash. The most commonly omitted part of the equation is operational expenses. This is a problem that newcomers to the business world often make. While they get enough money to handle the initial month (or 2-3 months) of running a business, they omit the fact that, on average, it takes 6 months to 2 years for a business to become self-sustainable. This is why you need to have a healthy reserve at hand.

Solution: Set a bit higher goal for your fundraising process.

3. Not using all their advantages

Qualifying for a government grant or not qualifying for one can make a world of difference in the business world. For instance, contacting an environmental consultant in order to help you make your business eco-friendly can help you qualify as a green business. It goes even further than that. There are a lot of benefits from marketing your business as eco-friendly. Other programs support women, veterans, the disabled and certain demographic groups. Explore all your options and check if you qualify.

Solution: Check for government grants and see if you qualify.

4. Rushing the hiring process

Hiring the wrong people is a huge problem for the majority of startups. If you have 4 people on your side and 1 of them is slacker, that’s 25% of your entire workforce. Then again, making sure that people have the right personality for your enterprise can be even more important. There are some employees who don’t underperform on paper but introduce disarray to your team. Emotional vampires, for instance, aren’t necessarily bad at what they do, they just make others underperform. Every hire counts.

Solution: Visualize how a person in question would fit your enterprise before hiring.

5.  Getting outcompeted

Even if you do know everything there is to know about the business and have a solid plan, the question of the saturation of the market is a serious issue that shouldn’t be taken lightly. One of the things you need to understand is that you’re a newcomer and the audience may already have brands that they trust. So, your offer needs to be either superior or unique. Even a superior offer is often not enough because it needs to be significantly better in order to make people want to switch teams.

Solution: Come up with something new and unique to offer or avoid oversaturated industries.

6. Pricing issues

Regardless of what else you have to offer, if the price is not right, chances are that your buyers simply won’t be interested in your product/service. It needs to be a balance between affordability and credibility and you don’t always want to go for the cheapest option. Look at it this way, a cheap piece of clothing is not always a good thing, which is why brands like Louis Vuitton prefer to destroy unsold goods than to offer them on a sale. In other words, it all depends on the type of brand image that you’re trying to create.

Solution: Make sure that your prices are competitive but don’t believe that cheaper is always better.

In conclusion

At the end of the day, one of the most important things to keep in mind is the importance of staying flexible and ready to adapt. While your business plan should be as comprehensive as possible, it’s also quite important to understand that no amount of preparation can make you ready for every outcome and eventuality. Some things you just have to handle on the go.