If you are looking to start a small business or already managing one, you are probably an extremely driven and a passionate individual like myself. Being a small business owner can be extremely rewarding. I like to be my own boss. My two interests in running a business are making money and having fun. But it is also very hard work.
Having owned three different ventures over three decades in the US has been exciting for me. During this time, I’ve experienced and overcome several challenges to build highly profitable businesses from scratch.
This National Small Business Week, I’d like to share my experience with those who are fairly new to the game. Here, I’ll talk about the top five challenges I’ve faced in each of my ventures and a few ways I’ve dealt with them.
”I would recommend opening a small business to anyone who is self-motivated, hardworking and not afraid of dealing with unforeseen situations...
1. How do I Grow my Business?
This is one of the biggest challenges you will face, irrespective of which small business you plan to launch and establish. A good marketing strategy and a larger product or service offering is a great way to grow one’s business. Investing in employees and infrastructure are some more ways that a small business owner can think of when trying to grow and expand their business.
2. Am I maximizing my Profits?
A small business can sustain only if it is profitable. Before jumping into a small business, it is important you understand different types of financial statements. A solid grasp on this will help you identify areas of your business to lower costs or increase revenue, thereby maximizing your profits. If you’re new to or a little rusty on this front, then taking a course in Managerial Accounting at your local community college is a quick way to gain or brush up these skills.
3. Tracking Cash Flow Closely
This goes hand-in-hand with ‘maximizing your profits’ and is extremely important. Like any savvy business owner, I track all my business expenses and income very closely. This means looking at each and every invoice to be paid, verifying each amount, issuing correct payment to vendors by check, credit card etc. and on time to avoid incurring expensive late fees. Next, all transactions must be reconciled to keep your books clean for tax season.
All this means tens of hours of manual work every week! And time is money! After evaluating many popular solutions in the market, I use Docyt’s fully automated Accounts Payable service to manage my invoices, vendor payments, auto-reconciliation of transactions and viewing cash flow insights. It seamlessly auto-manages my multiple Quickbooks accounts for all my business entities in one place. Best of all, it is an iPhone app so I can do this anywhere anytime!
My books are clean, my accountant loves me and I can manage my cash flow in seconds without any manual effort.
4. Did I Hire the Right People?
A business is only as good as its employees. It is a pretty big challenge for a small business owner to hire the right people on their team. The next one is to retain them. Respect your employees, pay them fairly, invest in their training. And most of all, never discriminate. This will foster trust between you and your team, driving them to do their best every day.
I also ensure I offer benefits, give incentives like commission or bonuses to keep them motivated.
5. Understanding Government Regulations
The Government regulations are designed to protect consumers as well as businesses. If you are attentive in following them and not try to game the system, you have nothing to worry about. The Government also offers a lot of tax advantages to small business owners while employees don’t have even a fraction of those. So understanding the government regulations goes a long way in building a profitable business.
Having a legal advisor and an accountant will help you on this front. The small business start-up kit from Nolo is also a great resource for basics on Government Compliance.
At the end of the day, being a small business owner is very fulfilling. And the challenges keep the game interesting. I would recommend opening a small business to anyone who is self-motivated, hardworking and not afraid of dealing with unforeseen situations.