We get it; starting a new business is exciting and most entrepreneurs can’t wait to dive into the process. The emotions of starting something new can be intoxicating. However, there are also many challenges associated with being a new, small business owner! Using a recent article by Attorney Lee Rosen as inspiration, we hope this list of often-seen business challenges helps you better prepare for your new venture:
1. Loss of freedom. Unless you hire a staff, you are solely responsible for all sales, marketing, clerical duties, accounting work, etc. Even if you do have a staff, you are ultimately accountable when it comes to making sure all tasks are accomplished correctly and on time. Say good-bye to someone else paying for your vacation time, 401K contributions, health insurance and sick leave. These benefits must now be provided by YOU, from profits you generate in your new business.
2. You’ll need help. Very few individuals have the skill or knowledge to start a business without assistance from accountants, attorneys, bankers, etc. Those who do forge ahead without professional advice often end up backtracking and hiring someone at a later date to fix problems that could have been avoided if guidance had been sought at the outset. Fixing problems after they exist almost ALWAYS costs more than doing things correctly in the first place.
3. It’s go time. An idea that sounds good on paper or over a drink with your buddies often is not practical in the real world. Be prepared to skin your knees and stub your toes, a lot, in the early years of your new business. Do your due diligence; research your prospective market and industry to determine whether your business idea has a fighting chance to be successful. Failure to do your homework in this context can cost you thousands of dollars and perhaps your professional reputation. When you open your doors for business, there are no “trial runs”. Customers expect professionalism from day one.
4. Success is a slow process. As with investments, focus on long-term success. Talk to other business owners about their experiences in starting a new venture and take notes. If you are opening a brick and mortar business, visit your local Chamber of Commerce to get a pulse on the community, its spending habits, community growth patterns, etc. So many factors can impact business growth, so the more you learn about your prospective clients’ wants and needs and your local economy, the better prepared you will be.
5. Prepare for an emotional rollercoaster. You will lose sleep over this business. Even if things are going well financially and you’re meeting or exceeding the goals you established, there are always time sensitive decisions that need to be made: “Should I consider taking on a partner?”, “How can I solve that customer’s problem?”, “Should I move the business to get a better building or lease?”, etc. More difficult, however, are the decisions that must be made when finances are NOT meeting expectations: “Where can I cut back on my expenses?”, “How am I going to be able to pay that vendor?”, “Why aren’t my customers paying me on time?”, etc. Learning to manage your emotions early will be key to surviving the highs and lows of being a business owner.
6. It’s all about sales. Without incoming revenue, your business will be unsustainable for very long. Building your customer base will require a significant amount of your time during and after business hours. If you’re not comfortable in the sales role, hire someone who is. If you have a brick and mortar store, become an active member of multiple community groups so people get to know you and the services you provide. The more integrated you become in your community, the more likely you are to get referrals.
7. It will be harder than you can imagine. If starting a business was easy, everyone would do it. You are one of the few risk takers who believe their products or services are valuable enough to warrant stepping out of the security of a regular paycheck into the unknown of self-employment. Be prepared for the confidence you feel initially to be shaken time and time again as a business owner. Our best advice to survive this rollercoaster: Surround yourself with successful individuals who have traveled this path of entrepreneurship before you and will share their wisdom with you when you struggle. Additionally, hire professionals whom you can trust to provide solid advice for managing your business, clients, and employees.
8. Customers aren’t always loyal. Clients usually choose to do business with whomever they know, like, and trust. Occasionally, however, some customers will simply bargain hunt and go with the cheapest product or supplier. The smartest thing you can do is to work on building your reputation and to provide a fairly priced product or service so clients trust you. Listen to what customers complain about in competing service providers and focus on resolving those issues for them. A better product or service, coupled with a decent promotional plan will draw you the customers you desire.
9. Employees can make or break you. Hiring employees that are a good fit for your company is a difficult task. Few individuals have the same commitment level as you and therefore, you will sometimes be disappointed in even your best employees. When employees have little to no “skin in the game”, it’s unreasonable to expect them to be as dedicated to the business as you. If your employees drive you crazy and you’re not sure how to better motivate them, consider hiring a management consulting firm. Whatever you do, don’t ignore a problematic employee. Address the issue now or face a larger, and often more explosive, situation later.
10. Business relationships are like marriage. No one starts out thinking their union will lead to intense unhappiness or a split. When it comes to your business partners, hope for the best but plan for the worst. At a minimum, you should have formal, written partnership, LLC or corporate documents, including a buy-sell agreement that stipulates management control, buy-in limitations and what happens in the event of a partner’s death or desire to terminate the business relationship. Also, commit to frequent, regular meetings with your business partners to discuss everything from financials, to workload expectations, to employee issues. Clearly defined roles of management and responsibility will help ward off unnecessary tension.
Don’t let these challenges dissuade you from moving forward with your business plan. Just use this information to formulate a plan of how you will handle these situations when they arise so you won’t be surprised. Preparing for the hurdles you will face should improve your odds of building a long-term, viable business.
If you need assistance with your business, contact Davis & McCann, P. A., Dodge City, KS. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on estate planning, Medicaid and long-term care planning, business formation, family business/small business succession planning, probate, trust administration, real estate, 1031 exchanges, and related matters.
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