Small Business Start-up Problems
There are many issues facing small business in the initial launch and successful management of these problems can be critical to the continuing profitability and growth of the business.
1. Most start-up small businesses cannot afford debt. Money is often scarce and initial costs high. This is common even if there is no debt; debt can add the burden of interest and principle payments. Revenues are usually slower to develop as owners often overestimate their ability to attract customers form existing business.
Borrow little or nothing. Borrowing increases the level of risk and potential loss if the business fails.
2. Your knowledge base to be successful must be broad. Don’t be misled by friends and associates who have never owned a business. Without a large staff of professional advisors running a business requires knowledge on a lot of topics. Knowledge of advertising and marketing, knowledge of finance and taxes, knowledge of production and operating costs, knowledge of employment laws and government regulations, knowledge of product supply and customer demands.
All businesses face these issues and the ones that survive are operated by owners with the knowledge to understand problems and anticipate potential solutions. The inexperienced often flounder and fail.
3. Advertising by financial and some government agencies directed towards small business tend to create an impression that getting loans or loan guarantees is readily available for those seeking the support. The reality is that neither is true.
Government grants, loans, or loan guarantees are difficult to get approved. Many businesses will not apply, many cannot meet the criteria for approval, and among those who apply few will receive support.
4. Many wishing to start a business do not understand the numbers.
Although many businesses do have a good business plan, all the written prose merely expresses in words the essence of the plan which is the numbers. One does not have to be an accountant to run a business but you must know the numbers. Cash flow, ratios, costs, pricing are essentials that any owner must know and understand completely to operate successfully.
5. Every successful business person must sell.
Owners cannot take the position that they want to own the business but don’t like to sell. Nothing happens in business if a sale does not occur. When a customer is ready to pay for the product or service offered a sale has to take place and that transaction will not take place without some selling effort from the company. Without some effort on the part of the ownership it is unlikely the business will be successful for long.