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Starting a small business for many Americans (about 19% of adults) has been more appealing than the traditional 9-5 lifestyle for several reasons. Running your own ship allows for endlessly creative freedoms, top-tier authority in critical decision-making, and the beautiful prerogative to design the team and processes exactly as you see fit. This sounds like the ultimate sweet spot for professionals ready to take the pen out of “The Man’s” hand and begin writing their narrative.
As there are many wonderful and glittering aspects of entrepreneurship, there are also many aspects that can be…not so dreamy. See the list below for the top five things that commonly keep business owners up at night and keep reading for possible solutions.
Here are the Top 5 Concerns of Small Business Owners
Cash Flow
Funding
Client Attraction
Talent Acquisition and Retention
Work-Life Balance
Cash Flow
It’s no surprise that cash flow is one of the top concerns of small business owners. Corporate giants across the world love to toss this verbiage around, but what does it really mean? In simplest terms, cash flow refers to the money coming in and out of your business. If a business has more money coming in than the amount of money going out, that is a positive cash flow. It sounds simple, right? So why do 61% of small business owners regularly struggle with cash flow issues, according to QuickBooks State of Small Business Cash Flow Survey?
Profit and Loss (P&L) Reports
One reason entrepreneurs struggle is by not understanding where their money is coming from and where it is truly going. A P&L Report is essentially the cash flow of your business put onto paper. Unquestionably, financial reports must be the least sexy part of owning a business, but it’s one of the most crucial pieces of information. Understanding your P&L Report just might be the secret sauce in the entrepreneurship recipe that will truly elevate your financial standing.
Tracking where your money is spent is the quickest way to determine where you may need to cut costs or reassign financial resources. Similarly, tracking how much money comes in from sales or investments shows where improvements can be made as far as pricing structures.
Once you’ve reviewed your P&L Report and truly understand your cash flow situation, you’re ready to dive into strategies to boost these numbers.
Cut Costs
Cutting costs is always easier said than done, but it doesn’t have to be overly complicated. Sometimes, cutting costs is as easy as nixing unnecessary software subscriptions or switching to less costly alternatives. For onsite, service-based businesses, cutting down on daily drive time by more efficient routing could make a huge difference in the bottom line. Automating certain processes to minimize in-person visits is also helpful. These small changes can lead to big differences over the year.
However, sometimes cutting costs is more in-depth. For example, having conversations with current vendors to renegotiate pricing can be a huge financial relief. Negotiating costs can be uncomfortable but remember that you and your vendor are a team. Go into the conversation knowing your current or projected annual spend with that vendor, realistic expectations of pricing improvement, and a mutually beneficial proposal, and you may be surprised about how well most are willing to work with you.
Some other ideas include buying equipment or supplies refurbished and purchasing supplies in bulk when possible.
There are many ways to cut costs, so analyze where big chunks of your money are being spent and see what minor (or big!) changes you can make.
Increase Prices
For many business owners, the concept of raising prices has a super ominous tone to it, but it’s crucial to sustainability. It’s time we shine this idea in a brighter light and think of it as a beautiful opportunity for growth and transformation! When raising prices, be sure to research your market and competitor’s offerings to ensure you’re not going too high or too low.
Did you know that pricing yourself too low can be just as detrimental as price gouging your clients? Consumers focus highly on perceived quality in relation to cost, so sometimes seeing the cheapest price is a red flag for potentially purchasing the cheapest quality.
Be sure to communicate your potential price increase for a smooth transition. For example, as stated by Harvard Business Review, “Amazon initially hinted it was contemplating a $20 – $40 increase. So when it formally announced “only” a $20 boost, customers let out a sigh of relief [...] The tactic of pre-announcing a possible 25% – 50% price increase was done to place the 50% figure in the minds of consumers and then beat this expectation by going with 25%.”
Not only does raising your prices create more revenue, but it is also a great opportunity to gain new, higher-paying customers and lose the customers that are not a great fit for you. Win-win-win!
Funding
Starting up a new business can be a very expensive feat, and according to the Federal Reserve: Survey of Terms of Business Lending, “Only 31% [of businesses] received all the funds they sought in 2021, compared to 51% in 2019.” Traditionally, business startups would apply for and receive funding from banking institutions. However, this method has declined in recent years. Many entrepreneurs now begin by bootstrapping (using personal funding) to get their businesses off the ground, but this is not a reliable form of long-term funding. Furthermore, friends and family members are often leaned upon to obtain the capital needed to fund startups. Obviously, bootstrapping and calling our rich Uncle Tom aren’t feasible methods for many business owners, so what other options may there be when getting approved for traditional methods is out the window?
Crowdfunding
This is a great opportunity for a lot of startups. Crowdfunding is highly effective, especially for businesses whose mission involves strengthening and uplifting a community. In this form of raising funds, only a small amount of investment is asked of large groups of people, which makes supporting the business more feasible for the general public. Funding can come from donations or from investors who in turn get a piece of equity into the business.
Many platforms are available to make this method easy to use if it seems like a good fit for your business.
Grants
Various public and private funders invest a portion of their capital in businesses and startups whose missions and values align with theirs. Grants are commonly associated with not-for-profit entities, but grants can be open to all types of businesses. Be sure to research organizations and individuals who may invest in your business concept.
For nonprofit businesses, Candid offers a free course on finding grants and decipher what type of ventures they’re looking to fund. Their course will teach you how to “Discover what funders are looking for in nonprofits seeking grants and how to find potential funders”
Sponsorship
Small businesses can seek sponsorship from corporations, local businesses, and even individuals. This is an exciting and versatile way to raise funds. A lot of creativity can be used here in determining which partnerships to establish and on what terms. Obtaining sponsorship is a fluid process, in which sponsorship packages can be predetermined and packages can also be customized to meet the goals of the sponsor. Typically, some form of marketing and publicity is exchanged for sponsorship dollars. However, sponsorship can come in the form of trades or termless conditions, as well.
For example:
A softball league is seeking sponsorship to purchase uniforms for their upcoming season. The softball league asks the local grocery store for a $2,000 sponsorship to cover the cost of the uniforms. In return, the grocery store’s logo will appear on the jerseys, and they’ll receive marketing promotions throughout each softball game.
In the form of a trade, the softball team may request sponsorship from the local pizza joint. No sponsorship dollars are given to the team, but the restaurant agrees to provide pizza to the players after each home game in return for the team to promote their restaurant during games.
A good place to start with sponsorship is to look at the local businesses in your area. Determine which ones are complementary to your offerings or your needs, and get creative with how the two of you can mutually benefit from a partnership.
Fundraising
A well-planned and seamlessly executed fundraiser can bring in a substantial amount of money. Fundraisers can be extravagant, lavish, huge money-makers. On the contrary, fundraisers can also be low-key, laid-back
, and inexpensive. This form of raising money is often neglected, but it can be fun for everyone and great for brand awareness.
Raffles are always a great option when trying to raise funds, especially if you have a unique sponsor behind the giveaway(s). These can be done in person, online, or both! People will purchase tickets to enter the raffle, and those funds can go directly toward your business.
Special events are also great money generators. Events can be anything from fancy galas, casino nights, or themed dances to bake sales and picnics.
Also, partnering with local businesses to help execute a fundraiser is a great way to reach a broader audience. Take the softball team we discussed earlier for example. They could run a fundraiser with that same local pizza joint, in which a portion of the restaurant’s sales that day will be donated to the team.
Determine what would be a great fit for you and your business and how much money you’d like to raise at the event. Plan an event that will realistically bring in that amount of money and be sure to plan it for a day and time that does not interfere with other big events happening concurrently.
Client Attraction
To attract the right clients, you must first determine who your “perfect client” is (and is not). Fishing for ideal clients and customers is not throwing a big net out there to see what is caught. It must be deliberate and thoughtful. Once you narrow down who you’re seeking, you can truly begin attracting them.
Effective Marketing Strategies
Business owners typically either love marketing or hate it, with not a lot in between. Either way, an effective strategy will promote positive brand association and provide clarity about what exactly is offered that can help the future client. A strategy can be short and sweet or lengthy with tons of content. The main idea is to know who your business is speaking to, how your product or service can help them, and how you will get that message across.
Determine the ideal client for your small business. This is called your avatar, and it is the backbone of all things marketing. Get specific with this. No detail is too small when determining your target audience. For example, an owner of a hair salon may determine that she wants to market towards mothers with an average household income of $80K who have children ages 4-12 with sensory sensitivity and live within a 15-mile radius of the salon.
Once the avatar is determined, map out exactly what your business offers and how it’s different from the competition. There are many theories about how to properly construct a compelling offer, but the bottom line is that it should be attractive to your ideal client.
Then, it’s time to get the word out! How will potential clients learn about the offering? This can be done in print via brochures, mailed offerings, flyers, etc. Websites, social media, and emails are examples of effective digital forms of spreading your message.
Websites are commonly thought to be optional, but according to Mayple, “75% of customers [say] that they have judged a business for the quality of their marketing website.” Building a website is not for the faint of heart, but luckily there are affordable resources to help with this. Social media is a fantastic tool, but it’s safe to say that a website will only further accelerate your success as a small business owner.
Referrals and Incentives
“82% of small businesses claim referrals as their main source of new business”
That is a massive percentage of small businesses depending on referrals! This is such an effective form of acquiring new clients, because referrals commonly come from someone the potential client trusts. An increasing number of consumers are looking to peers to determine the best products and services available, rather than depending on traditional forms of marketing. Offering existing clients an incentive to refer your product or service to someone they know is a great way to continue this form of organic business growth.
Talent Acquisition and Retention
Business owners are struggling now more than ever to find the help they need.
Most industries are still experiencing an ongoing labor shortage, with service-based businesses taking the biggest hit. According to the U.S. Bureau of Labor Statistics reports, “The professional services industry has experienced the highest quit rates of all industries.”
So, as busy entrepreneurs in search of good help, what can be done to attract the right employee – and keep them?
Compensation
Money talks, and more professionals are losing loyalty to businesses that aren’t paying fair wages. With living costs on the rise, employees are desperately seeking adequate compensation to stay afloat financially. This is a struggle for business owners whose bottom lines are already squeezed, but the reality is that it is much more costly to lose staff and onboard replacements than it is to offer competitive wages to existing employees.
Compensation also comes in the form of benefits and career development. Benefits are undoubtedly a costly expense for employers, but it is commonly what good employees are seeking.
Pay your help well, give them livable benefits, and offer ways for them to continue to learn and develop their skills through your business.
Flexibility
Another benefit employees are more commonly seeking in recent years is workplace flexibility. This can come in the form of offering remote or hybrid workdays, autonomy in completing tasks on untraditional workday schedules, or even offering unique workweek schedules. There are many possibilities in giving employees freedom where possible, but it is important to have clear mutual expectations under these circumstances.
After the pandemic, more and more professionals are becoming accustomed to these working conditions, so these perks aren’t quite as foreign to business owners as they once were. However, owners who refuse to adapt to these requests are likely to experience higher turnover.
Automation
Automation is very attractive to a growing number of young professionals who enjoy making technological advances, giving them the opportunity to learn or create new programs to enhance efficiency. An online system for clients to share customer service issues with you is a great example of an automated platform. A customer service team can be downsized by not needing as many employees answering phone calls. Another example is a childcare facility having a place on its website to inquire about enrollment or complete new enrollment forms. These options provide development opportunities for you or your staff.
A small business that has automated processes could see a huge gain in efficiency. It also could lessen the blow if an employee does decide to part ways because the programs are already in place and take minimal training to navigate.
Work-Life Balance
Similarly to how employees want a work-life balance, more and more business owners are struggling to remember what this term even means. Increasing demands on the business owners means less time for friends, family, or sleep. All work and no life – no balance. This can only lead to burnout, which is why it’s important for entrepreneurs to take a step back and breathe.
Sadly, “Nearly [56% of] small-business owners feel like they’re flying completely solo and are left to solve business problems on their own—without encouragement, accountability, and anyone to talk to about their decisions.”
Owning a business isn’t all fun and games, but it shouldn’t be so dreary, either! So, my fellow entrepreneurs, here’s what we can do to remind ourselves that we really do love what we do:
Take Care of Yourself
Seriously, people – we’ve all heard this a thousand times, but treat your body right and your body will respond! Exercise has an extraordinary number of positive effects on the psyche, and most entrepreneurs need all of them to combat the stressful challenges faced constantly with owning a business. Exercise doesn’t have to mean bench pressing elephants or running a 5K before breakfast, but a short walk any time in the day could make all the difference when it comes to mood, confidence, and overall motivation to conquer your nagging tasks. Find what routine works for you within your busy schedule and stick to it. Your mind and productivity will thank you!
Set Realistic Goals
It’s easy to get caught in the trap that every task needs to be completed today, right now. Amid a startup, many business owners are already five steps ahead and trying to plan how to open their second brick-and-mortar location when the first one isn’t even open, yet. It’s how entrepreneurs are wired, and we can’t help it; it’s in our blood.
But stop it!
To stay sane through starting or operating a business, we must set realistic expectations and goals for ourselves. Measurable milestones must be created for us to check the box before moving on to the next task. There’s no quicker way to burn out than trying to sprint to the finish line in a long-winded marathon.
One way to do this is by identifying two main points: (1) where your business is currently and (2) the end goal for your business. Once you have these determinations, identify what stages need to happen in between. Do you need more products, more locations, more offerings, a wider geographical reach? Envision your entire business as a linear timeline with major phases identified.
Take the phase you’re currently in and break it into bullet points of what needs to be accomplished before moving on to the next phase. If needed, you can dissect the bullet points down further to be more specific with tasks as needed. Continue to make bullet points and sub-points until they are comfortable to digest. Handle the tasks one at a time in order of priority for your specific business needs. Here’s an example:
Ask for Help
Lots of entrepreneurs welcome all the help they can get and love to delegate and get others involved. Others struggle a bit to trust things will be executed properly, which is totally understandable. However, when running a business with multiple layers of complexity and various moving pieces, it is imperative that tasks are delegated to reduce the risk of burnout and ensure the owner’s plate is not bogged down with tasks unrelated to growing and improving the business.
The Elevate and Delegate Tool designed by EOS is a really simple but effective tool to calculate tasks you should be handling as the business owner, and which tasks to delegate to staff members or people supporting you through your venture. Check out the video here: https://www.youtube.com/watch?v=C1OWLyE4DQo&feature=youtu.be
Conclusion
In short, being an entrepreneur is full of fun, adventure, and medial tasks. Many things can make a business owner lose hair, but it seems to come down to the five main things: finances, getting clients, finding help, and remembering to live life as a human being and not just a business owner.
If you’re struggling in any of these areas, you’re not the only one! There’s a reason countless articles, case studies, and posts have been written on this very same topic. It’s super common to experience these stressors throughout the lifespan of entrepreneurship. If you’ve identified one or more areas where you’d like some extra support, we’ve got you covered!
Looking for support?
If you’re overwhelmed by sorting out money and stuck on financials:
Selena Fogg CPA whips out numbers and makes this process super simple.
If you want to attract clients and build your brand with authority and consistency:
R. King Design Group has so much fun with this and dissolves all branding anxiety.
References:
https://www.washingtonpost.com/business/2023/09/14/small-business-entrepreneurship-gem-report/
https://quickbooks.intuit.com/au/blog/running-a-business/bounce-back-to-positive-cash-flow/
https://learning.candid.org/training/2024-08-20-introduction-to-finding-grants/
https://www.mayple.com/blog/marketing-statistics-for-startups
https://www.youtube.com/watch?v=C1OWLyE4DQo&feature=youtu.be
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