Top Challenges Facing Small Businesses and Entrepreneurs

1. Talent. Finding and retaining qualified workers is the most significant challenge to the growth and survival of a business. Using people without the right skill sets is not only waste time, but also waste of resources. Many people you hire will turn out to be unreliable or incompetent or both.

2. Marketing and public relations. Many entrepreneurs have a lot of knowledge of his product or business, but do not how to promote his products or services. A good product is not enough if nobody knows about it. The entrepreneur must also learn creative marketing, and targeting public relations to spread awareness of his product and services.

3. Brand equity. As a new business, building brand equity poses one of the most challenging tasks of a business. If you do not have a good track record of setting up other businesses, many people may not trust you and your company as you have not built up your reputation.

4. Cashflow. Doing business these days definitely is not cheap, especially if you want it to be really successful. A slightly mismanaged cashflow can cause a business to go down easily, and many startups fail because of this.

5. State and federal regulations. There are a lot of regulations involved in starting a business in almost any country. Getting compliance and navigating through the tough government regulations is a very tough task. Knowing where to get government grants and subsidies is a bonus, and it is often not as easy as the guidelines.

6. Economic uncertainty. It is hard to start a business when the economy is in bad. When there is high unemployment, business and consumers may have tight budget and are unlikely to take risk to try a new product or service. Furthermore, it is harder to get a loan.

7. Keeping up with technology. Technology moves really fast. There are always new software or devices out in the market that can help in your business. Even though some of these may be essential, being able to afford them and choosing the right tools and using new technology to help your business grow can be very tough.

8. Access to capital. Some businesses require large amounts of capital to function. Undercapitalization may inhibit the growth and sometimes even be cause a company to fail. Entrepreneurs who are not well connected or do not have a track record may find it very difficult to find capital.

9. Lack of specific skills. Some businesses need very specific talents which are hard to find or expensive. If specific talents to the business are important, research should be done to see if they are available before starting the business.

10. Over reliance on founders. The founders are usually the ones that do everything. They come out with the ideas, the capital and everything else necessary to start. As a result, some of these companies cannot function without their founders, and it poses a great threat to scalability and growth. Once the company is stable, the employees should play a bigger role in the company.

Many businesses are family owned businesses as it is easy to find family members and start a company. For many family owned business, here are the common challenged faced:

1. Informality Most family business are informal and do not have much structure or policies. Communications may be informal and may be influenced by political divisions or other relationship problems.

2. Limited Opinion As the family business usually hires family members, there may be lack of outside opinions and this restricts on the diversity of ideas required to expand the business.

3. Lack of Talent and high turnover Hiring family members for high positions may prevent really good talents from joining the company as there is a "glass ceiling" Some family members may even lack the skills required for the job, and firing a family member is hard. When employees feel that the family will always promote over outsiders and when employees realize that management is incompetent they will leave.

4. Conservative and paternalistic As most family owned businesses are run by older family members, there is a resistance to changes and new ideas proposed by younger family members and tradition will prevail over best practices.

5. No clear exit strategy Family businesses usually run till they fail. At no point of the business do they call for a valuation or plan to increase or decrease its value.

6. No clear roles or training Family members may be placed into positions which are not good fit for them, and it is done so due to relationship in the family. There is often no formal training, documentation or business continuity plan if a family member has to retire or leaves the company.

7. Growth. Due to lack of capital, talents, new investments or resistance to reinvest in the business, family businesses often face challenges in growing or expanding regionally or internationally.

These are the common challenges faced by businesses. If you plan to start one, perhaps you can think of overcoming some of these as you write your business plan.

Robin is an international entrepreneur who is involved in training, researching and consulting companies in creativity, communications and Entrepreneurship. Robin owns several companies and Greenyarn LLC, a nanotechnology company based in Boston manufacturing sustainable socks, fabric and apparel for environmentally conscious consumers. Robin is also a guest speaker at many events and tradeshows, and love to share knowledge and tips. http://www.facebook.com/socialhub

Top Challenges Facing Small Businesses and Entrepreneurs

By Robin B Low