5 Common Challenges Small Business Face
Starting a small business comes with many challenges. But even after you have gotten your company off the ground, maintaining it can be even more challenging. The Bureau of Labor Statistics notes that about 20% of businesses fail in their first year and about 50% of small businesses fail in their fifth year.
Today our McAllen virtual chief financial officer (VCFO) at Abigail Y. Murray CPA, LLC, will go in-depth on the five biggest challenges many small businesses encounter and how a VCFO can be just what you need to help you avoid these pitfalls.
The Challenges Your Small Business May Face
1. Client Dependence
As businesses take off, client dependence tends to be a major issue. Let’s say you only have one or two clients. Those clients will initially bring substantial value to your business. Even as you begin to get more clients, a large percentage of your sales and income can still be dependent on only these initial customers.
However, over time, your business will likely see sales balance out, in regards to the proportion you bring in for each client. Unfortunately, things can get complicated at this point. When you’ve had a client with you since the initial stages of your company, you are likely to feel much more obligated to them – especially when problems arise.
While it only makes sense for you to want to focus on your main clients in the beginning, doing so can result in failure to secure growth in the long-term. Find ways to bring on a diversified client base, so your business can steadily grow, even if you lose a few of your first clients.
2. Money Management
Managing cash flow is imperative when money starts to come in. When you hire a VCFO, they can assist you in identifying any problems that can affect this aspect of your business and help you to generate a cash flow management strategy that can keep your operations running smoothly – even in the face of financial challenges. The more customers you gain, the more daunting the task of bookkeeping can become. That’s why getting the right professional help is vital to the success of your business.
3. Business Owners Get Tired
Developing a new business and balancing the assumed responsibilities can be overwhelming for business owners. Long hours, piles of work, and the pressure to succeed can be too as months and years begin to pass. This is especially true when you try to handle every aspect of your business alone.
Fatigue can lead to a number of problems for small business owners. A trusted VCFO can help you to organize your time by offering strategic advice and information regarding key components of your business including money management, budgeting, financial reporting, and how to reduce risk.
4. Dependence on Founder
The (understandable) amount of time business owners spend making sure their business functions properly can ultimately make the business dependent on them for efficient operations and success. Founder dependence can happen when a business owner fails to let go of smaller assignments and duties, even as the business continues to expand.
Giving more control to your employees, managers, partners, and support system – such as a VCFO – will help your business run smoothly. It is worth noting that it may take some time and effort to seek the most fitting employees to rely on.
5. Balance of Quality and Growth
Many small businesses have a hard time sustaining the quality of their work, product, or services as their businesses evolve. When initially making a business plan, make a compromise that will ensure you can uphold growth without tarnishing the overall mission and goal of your brand.
It’s essential to consider how to work through these obstacles in order to achieve success in your endeavors as a business. Each challenge gives you a chance to find a way to get past it and improve.
Let Our McAllen VCFO Help Your Small Business Flourish
Our South Texas VCFO can provide you with timely and precise financial information, meeting with you on a regular basis so that you can make solid financial choices. We want to help you do what you do best in an effort to ensure your business’ success and growth.
If you have a small business, meet with our skilled McAllen VCFO at Abigail Y. Murray CPA, LLC, today!