There are numerous obstacles that we encounter to run a successful business. According to the U.S. Chamber of Commerce, 70% of infant companies are operating at the end of the second year, and just half of them hit the five-year mark. This statistic demonstrates that small businesses may have further financial challenges and it emphasizes the importance of solutions to overcome.
The small businesses have been struggling with the lack of cash flow the most according to the 2019 small business trends report from Guidant financial. The sufficient use of cash is crucial to make an investment or cover major fixed costs such as rent. Ken Wentworth, owner of Mr.Biz Solutions once mentioned that “you have no business without cash” and his statement signifies how important the cash is to fulfill vendor invoices or purchase supplies as well as equipment. In order to maintain operations, it is imperative to expand the ways of payment processes. For example, setting up an online payment portal, including Paypal or Apple Pay, is one of the effective methods to obtain the investment from clients. It is also suggested to send automated payment reminders as it provides incentives for clients to pay sooner.
Moreover, the advertisement has become more intense for the small business owners because it is extremely difficult to advertise their products in a large industry by competing with mature corporations which have great brand-name value. Ross from Guidant Financial said that “the three main online advertising platforms (Google, Facebook, and instagram) have become extremely competitive because the large companies routinely run campaigns and dollar-intensive marketing through those platforms.” Then what should the small business do to attract more customers? It is important for firms to target a specific group of consumers and establish trusts. It does not have to be simply advertising, the creation of helpful videos addressing related topics can be another way to improve search ranking and attract potential customers. It would be useful not only for giving information but also for creating a good brand image.
Lastly, the unexpected expenses are inevitable while operating the business. People easily forget to consider depreciation or worn-out capital goods such as damaged equipment, stolen inventory or a broken AC system. A 2018 small business accounting survey from Clutch revealed that 35 percent of small business owners cited unforeseen expenses as their main financial challenge. It emphasizes the reason why the firms need to allocate emergency expenses into their budget regularly to minimize the impact of occasional crises. It is recommended to predict what you might spend based on the past records and reserve your cash into a savings account for future use. It will definitely help the businesses to reduce possible debt and interest expenses; and to make the financial state more stable.
The operation of a successful business begins with how to overcome the difficulties. It may be unstable in the beginning and the results may not be satisfactory compared to your efforts. However, we must keep in mind that all companies face financial challenges but only companies which cope with these problems succeed in the market.
By Jeong Hyeon Ji, Nora, ACS International
