You’re starting a small business and you expected to encounter a few challenges along the way.
But you’re 30 or 60 or 90 days out, and nothing seems to be going your way. Story or your life or just a few common small business challenges? Whatever the reason, here are 3 of the most common challenges you might encounter when opening a small business, and a few ways to prevent, conquer, and thrive through them.
You’ve Run (or are Running) Out of Cash
Running out of cash early on, or not having that loan or funding you were counting on come through, happens. It’s one of the most common small business challenges and very possibly one that you will face at some point in the lifespan of your business.
We’ve all heard the statistic that about 50 percent of businesses fail within their first year. It’s a scary number which becomes all too real when bills are piling up, and your cash is quickly depleting. So what is a small business owner to do when they are burning through cash, sometimes even before their doors open?
Our first piece of advice for conquering small business challenges is to put out the fires. If you already owe people money and have bills you can’t pay, do your darndest to get those bills squared away. This might sound easier said than done, but there are a variety of ways to make this happen. Our first recommendation is to take out a small business loan — or apply for an additional one. If you’re working with mediocre to bad credit, not all is lost. Getting a small business loan with bad credit is possible. It might not be the loan of your dreams with an ideal interest rate, but it will get you by if you find yourself in a pinch.
There is also the option of sending up a crowdfunding page, which many businesses have done before. You can use websites like Kickstarter, Indiegogo, and GoFundMe. Even if it’s just friends and family that wind up pitching in, every little bit can help. If you’re not familiar with the ins and outs of the concept you can check out this crowdfunding guide to get you started. Well all else fails, there is the option of financing your business with a credit card. You might see tons of red flags with this option, and it probably shouldn’t be your first choice, but if you have to do it to survive then so be it. Just make sure you’re doing it responsibly.
Now that your fires are put out, it’s time to scale back. In other words, you might just not be able to do everything you had hoped and dreamed in your business, at least not right away. So whether that means canceling the order for that 20K jukebox you had your heart set on or cutting down on your square footage, you’re going to have to make a few sacrifices. This doesn’t mean that you won’t be able to accomplish everything you had hoped and dreamed for your business, just probably not within the first few quarters (or maybe years). Just keep in mind that opening and running a small business is a marathon, not a sprint.
Your Construction is Taking Longer than Anticipated
If construction is taking longer or costing more than you expected, you probably aren’t surprised, or at least you shouldn’t be. Construction projects, whether residential or commercial are a challenge for small businesses and notorious for taking longer to complete and costing more than initially planned. So if you’re in the beginning stages of your construction, it’s best to budget in additional weeks and dollars. But if you’re already finding yourself in the weeds, there a few things you can do to help mitigate time and money lost.
1. Hire a Professional
This is for all of your DIYers out there that took it upon yourselves to build your coffee shop’s counter tops or install your clothing boutique’s dressing rooms. Talk about small business challenges! If you’re falling behind your construction schedule or are worried that your handy work won’t be up to code, take the plunge and hire a professional to finish (or redo) the work. Though it might appear to be more expensive upfront, if you’re delaying opening your business by weeks or even months, take into consideration the loss of revenue. In the long run, hiring someone to do the job might just save you money.
2. Talk Opening with Your Contractor
Unfortunately, not all contractors are cut from the same cloth. And though most are reputable and honest small business owners just like yourself, it’s important that if something goes awry with your construction, you know enough to protect your rights. The first thing you can do is to be proactive in protecting your interests with a detailed contract that outlines the scope of the work, when is expected to be completed, and the steps the contractor will take to complete the job if they fall behind. You also want to make sure that you are working with a licensed contractor. Though that seems like an obvious decision, some contractors do try to slide by without the required paperwork. But if you’ve already starting work and don’t have a contract, or have one but your contractor doesn’t seem to want to play ball, there are a few things you can do.
The first is to have an open discussion with your contractor. If they are at fault, they should be willing to put in the extra time (or potentially money) to get the project completed on time. Construction is a service industry and contractors are only as good and their finished products. And since contractors rely heavily on references, it will be in there best interest not to burn any bridges and to make sure that the project reaches substantial completion as quickly as possible. Substantial completion is pretty much the stage in which the project is finished enough that the space is usable.
3. Know Your Options
If having an honest and open conversation with your contractor doesn’t work or the contract you’re working off of isn’t protecting your rights, you might want to seek outside help or intervention from a third party. This third party will serve as a mediator to help you and your contractor agree on a new timeline. In this case, you’ll also want to investigate whether your contractor is bonded and insured. Ideally, you would have done this at the start of your project, but if you didn’t then, you definitely should now. If a contractor is bonded, that means that they have purchased a surety bond that can provide compensation to a property owner if a job is left incomplete.
4. Pull the Plug and Rehire
When all else fails, fire your contractor and hire someone else. Depending on whether you signed a contract with your first contractor and what that contract states, you might need to seek the advice of a lawyer. They will be able to advise you on the best course of action.
You Can’t Find Quality Employees to Hire
If you’re having trouble finding the right people to hire, you’re not alone. Hiring well-trained and professional individuals can be challenging when just starting out, especially if you’ve never interviewed and hired employees. Depending on what your situation is — whether it’s a lack of applicants or the quality is lacking — we have a few suggestions.
If you’re experiencing a lack of qualified resumes coming across your desk, take a look at where you are posting/advertising your position/s. Where are you posting? Craigslist? Monster? Though many job hunters will search across platforms, some will dedicate the majority of their time to just a few. So make sure that you aren’t just posting on one site. You don’t need to be on all sites and platforms, but choose the three or four that are the most relevant to the open positions you are hiring for will help increase the number of resumes you receive.
If your issue isn’t the number of resumes you receive but the quality, take a look at not only where you are posting the job description but also how your job listings are composed. If you’re only advertising on Craigslist, you are going to be missing out on applicants. Though Craigslist used to be the go-to destination for job seekers, newer and more efficient job search sites such as Indeed and Glassdoor have scooped up the in-the-know job hunters. So make sure you are posting on the most relevant sites for you.
You’ll also want to make sure that the job description accurately conveys the role. If you skimp on the description or leave it too high level, you’re likely to receive resumes from candidates that aren’t as well qualified. In the end, it’s not just where you post job descriptions, it’s how you post them.
Acquiring an adequate number of quality resumes is important, but how you interview these candidates is equally, if not more crucial. If you find that the people you are calling in for interviews aren’t standing up to their resumes, try doing a brief 15 to 20-minute chat with them on the phone prior to bringing them in. This will ensure you are neither wasting their time nor yours. Once you get through that initial stage, make sure that the in-person questions you ask will provide you with information on both the applicant’s skill set and personality. Beyond hiring employees with the necessary skills and experience, you want to bring onboard employees that believe in the mission of your business, are dedicated to the work, and that you can see yourself getting along with.
If you still feel like you aren’t hiring the right people, ask a business partner, a friend, or a relative that has hiring experience to chip in. They can perform the second (or first) round of interviews with candidates and provide you with valuable feedback.
There is no lack of challenges for small business owners — it comes with the territory. This is especially true if it’s your first foray into the wild west of small business ownership. Beyond what we touched on in this post, the most important advice we can give you is to face difficulty head on. Though it sounds simple, it’s human nature not to want to deal with the unpleasant. But the longer you put off solving a problem, the larger it will grow. And when it comes to the health of your small business, there are no excuses.