Small Business Owners Face Challenges

A recent article in Huffington post asked small business owners what challenges they expected in 2012. The sample size of owners was small, but the general concerns apply to the majority of small business owners. This article is about those challenges and possible solutions.

All businesses have the same issues: lack of leadership, cash flow, employees and marketing. The level of challenge is dependent on the market, location of the business, size of the business and required employee skill level.

Leadership is a critical issue. Businesses are usually run by managers and not leaders. Companies with out leadership eventually wither and die due to a lack of vision for the future.

The top four challenges are:

1. Leadershipis a concern for small businesses that have 50 or more employees. Most small business owners have no prior business experience. They might have had some management level experience, but have no idea of what it takes to lead a company to success. Leadership requires a totally different mindset.

  • Successful leaders are visionaries. They see the big picture and are usually not afraid to make a decision based on gut instinct and facts.
  • A leader inspires others with congruent actions. Their actions match their words.
  • A leader establishes the focus and objectives and continually verifies everyone understands.
  • A leader speaks the language of the employees. Communication is done in a context that everyone understands.
  • A leader is in tune with the challenges faced by employees and provides guidance and solutions to reduce the frustrations

How does a small business owner learn to be a leader? The majority learn through trial and error. Others may be fortunate enough to have a mentor who can help them reduce their learning curve. There are very few institutions that teach leadership. I suspect it is because leadership is a mindset and requires experience to perfect. The best opportunity for a small business owner is to join a group of business owners, find a mentor that is truly a leader and learn from that individual.

2. Money to Sustain Operations and/or Expand: In the past businesses were able to secure credit lines from banks to keep their business going when cash flow was sporadic. The recent economic meltdown has completely changed the ability of businesses to obtain additional funds. The banks are holding on to their money and are no longer comfortable lending to small businesses.

This presents a real dilemma for small business owners as their trusted source of cash can no longer be depended upon. There are other sources for loans, but usually at a much higher cost to the borrower. The result is increased costs and less profits.

3. Skilled Employees: Today's business requires an employee with communication, computer and math skills as well as the ability to interact with customers. Unfortunately the labor pool with these skills is limited in some locations. Then the owner has to train the new employee on how to do basic tasks. This is time most small business owners do not have.

4. Marketing: Marketing has changed the past five years. In the past an owner could put an ad in the paper and market to the neighboring areas. Today, the current business owner has a reduced market due to the slow economy if their customer base is local. The challenge of maintaining their client base is multifaceted.

The internet provides access to a much broader customer base if the product is something that can be shipped or is electronic in nature. The internet does give a business the ability to focus on their specific market. Internet marketing can be tailored around locations, age groups, interests, etc. If the business owner does not know how to do this type of marketing they will have to either learn on their own, barter or outsource the service. Small local businesses have a better chance of bartering for services than one that is not involved in the local business community.

Do you own a small business? Are these your challenges? I would like to hear from you. Fortunately there is a movement to help small businesses overcome their challenges. Starbucks has a program to provide funding for small business. Leadership and marketing mentorships are available to all businesses that need support in leading and growing their business.

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