Common Obstacles Small Businesses Face

Wed, Feb 8, 2012

6. Misc.

Starting a small business is a dream for many adults. When we first come out of high school or college, we may still have the stars in our eyes, thinking that we will soon be CEOs or major corporations, or big-name film directors, or famous authors. But we enter the working world and realize that only a select number will ever reach those heights within an industry. The rest of us can only hope for something in the middle. That is, of course, unless we start our own small business. And so the dream becomes to be one’s own boss, manage one’s own company, and generally see the fruits of one’s own labor. Sadly, it’s not all wine and roses; there will be plenty of roadblocks on your way to success should you choose this route in your professional life. But by facing these challenges and overcoming you stand to gain a lot, so here are just a few obstacles you’re likely to come up against (and how to combat them).

  1. The business plan. Every small business starts with an idea, but you’re going to need a business plan to make it a reality. This requires a lot of thought and honesty on your part. You need to include in this plan a description of your business (how it will run, what are the goals and potential problems, etc.), all of your market research (to prove your idea is viable), a marketing proposal, financial projections, and of course, your own work history to show that you are capable of managing a business. If you skimp on any part of this plan you may not succeed in business. In truth, you may not even get off the ground since this is the document you will use to get funding.
  2. Investment capital. When it comes to funding, too much can be just as bad as too little, but the real problem for most small businesses is none at all. So keep your options open. You may start by applying for loans at banks, but you should also consider personal loans (from family and friends), partnerships, and other types of investors (venture capital, angel investor, etc.). Just be aware of the fact that the banks turned you down for a reason. Perhaps you should address that before you ask mom and dad to clean out their retirement savings.
  3. Setting prices. You may not be Wal-Mart, but you’re also not operating on Rodeo Drive. Setting your prices too low or two high could mean major problems for your small business. So while you can certainly price competitively, you’ll need to first determine just who your competition is. And keep in mind that you offer added value in the way of quality goods and incredible customer service.
  4. Marketing mistakes. In the beginning, less is more. This is not to say that you should curb marketing efforts, it just means you need to work within a budget and find low-cost options that still get your name out to the public. And when you start earning some cash, reinvest it in the business with marketing techniques that seem to deliver on paying customers.
  5. Bad location. As part of your initial research you’ll need to survey a variety of locations if you plan to open a brick-and-mortar store or office, and there are many things to consider. How busy is the intersection? Is it easy to get in and out of your parking lot or center? Are you visible from the street? Is there a high volume of foot traffic? What are the demographics of the area? In terms of manufacturing, you can simply look to merchant warehouse reviews to find the information you need to make an informed decision. But when it comes to a storefront the onus is on you to do as much research as possible to ensure that the location you choose will help you to be successful.
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