As a small business owner, myself, I can intimately relate to what you as a small business owner feel and worry about with today’s economic climate. Small businesses are the backbone of the American economy, accounting for 99.7% of all employer firms and 47.1% of private sector employment*. However, small businesses also face several challenges, including rising costs, increasing competition, and a changing regulatory landscape.
In recent years, thanks to COVID-19, knowing how to overcome challenges facing small businesses was a new skill needed to succeed. During this time frame you have been hit with several different concerns that maybe you haven’t had to address or deal with before. Now that we are officially “done” with the ‘vid’, these concerns are still very present.
Overcome Challenges Facing Small Businesses
Let’s dig into the top three concerns for small businesses in the United States today, with a few solutions and ideas for you to consider:
1. Rising costs
The cost of doing business has been rising steadily in recent years, driven by factors such as rising wages, healthcare costs, and the cost of goods and services. These rising costs can put a strain on small businesses’ profits and make it difficult for you to compete with larger businesses.
During the pandemic, consumers and small businesses alike have been hit with delays in receiving products and materials due to supply chain interruptions. Even though we are out of the pandemic era, and the backlog has been removed, the costs associated with shipping haven’t gone down.
What can you do about rising costs? Here are three ways you as a small business owner can combat rising costs:
- Negotiate better deals with suppliers. If your business relies on raw materials or other supplies, see if you can negotiate better prices with your suppliers. You may be able to get discounts for buying in bulk, paying early, or agreeing to a long-term contract
- Cut back on unnecessary expenses. Take a close look at your business expenses and see where you can cut back. This could mean reducing the number of employees you have, canceling unnecessary subscriptions, or using less energy.
- Raise prices. This may be the last resort, but if your costs are rising faster than your revenue, you may need to raise prices. Just be sure to do it in a way that doesn’t alienate your customers.
It’s important to note there is no one-size-fits-all solution for combating rising costs. The best approach will vary depending on your specific business and situation. However, by considering these tips, you may be able to help your business stay afloat during a time of economic uncertainty.
2. Increasing competition
As a small business, you are also facing increasing competition from larger businesses, both domestic and foreign. Larger businesses have more resources and can often offer lower prices and more variety than small businesses. This can make it difficult for small businesses to attract and retain customers.
Here are three ways you can consider to can stand against the increasing competition:
- Focus on customer service. In most circumstances, as a small business, you can often provide better customer service than larger businesses. This is because you may have more flexibility and can be more responsive to your customers’ needs. Take the time to train and reinforce with your employees the importance of why being friendly, knowledgeable, and helpful is critical to your overall success. And their employment. You can consider going the extra mile to make sure your customers are happy.
- Offer unique products or services. If you can offer something your competitors don’t, you’ll be in a much better position to compete. This could be a unique product, a new service, or a different way of doing business. Start thinking outside the box.
- Get involved in your community. Get to know your customers and build relationships with them. Get involved in local events and organizations. Show your customers that you care about them and the community.
The above three ideas can give you a start and possibly give your small business a fighting chance against the competition. What other ideas can you think of to be competitive?
3. A changing regulatory landscape
The regulatory landscape for small businesses is constantly changing, and this can make it difficult for you to keep up. New regulations can add costs and complexity, and they can make it difficult for you as a small business to comply.
Here are three ways you as a small business owner can adapt to a changing regulatory landscape:
- Stay up to date on regulations. This may seem like a no-brainer, but it’s important to stay up-to-date on the latest regulations that affect your business. You can do this by subscribing to industry newsletters, following government agencies on social media, and attending industry events. Something I always tell my clients is to meet with their tax advisor every year – outside of tax season. Review what regulations may have changed and how those changes are impacting you.
- Hire a compliance expert. If you don’t have the time or resources to stay up to date on regulations yourself, you can hire a compliance expert to help you. A compliance expert can help you understand the regulations that apply to your business, develop a compliance plan, and train your employees on compliance procedures. Your small business insurance agent, CPA, or your small business lawyer are three great resources to ask for support when it comes to better understanding regulations.
- Be proactive. Don’t wait for the government to come knocking on your door. Be proactive and reach out to your local government officials to learn about upcoming regulations and how they may affect your business. You can also attend public hearings and provide feedback on proposed regulations. Get involved. This is not about being political, it is about being educated, open, and willing to learn.
Considering these three ideas, you can help your small business adapt to a changing regulatory landscape. With all of this in mind, I wanted to share a few additional tips regarding regulations for you to consider as well:
- Get help from your state or local government. Many state and local governments offer resources to help small businesses comply with regulations. These resources may include training, technical assistance, and financial assistance.
- Join a trade association. Trade associations can provide you with information about regulations that affect your industry, as well as resources to help you comply.
- Use technology. There are a number of software programs and online resources that can help you stay up-to-date on regulations and comply with them.
By taking these steps, you can help your small business stay compliant with regulations and avoid costly fines or penalties.
Overcome challenges facing small businesses in the United States can be frustrating, infuriating, and down right maddening. However, as a small business owner you are also resilient and innovative. And you have a long history of overcoming challenges and thriving to lean on. With the right support, you can continue to play a vital role in both your local economy and the American economy.
Recap: How to Overcome Challenges Facing Small Businesses
Here are some tips for small businesses to overcome these challenges:
Focus on your strengths. Small businesses have a number of advantages over larger businesses, such as flexibility, agility, and a close connection to their customers. Focus on your strengths and use them to your advantage.
Network with other small businesses. Networking with other small businesses can help you learn from each other, share resources, and find new customers. There are a number of organizations and resources available to help small businesses network.
Get involved in your community. Involving yourself in your community can help you build relationships with potential customers and partners. It can also help you raise awareness of your business and its products or services.
Stay up to date on regulations. It’s important to stay up-to-date on regulations that affect your business. There are several resources available to help you stay informed.
Seek financial assistance. There are a number of government programs and private lenders that offer financial assistance to small businesses. Don’t be afraid to ask for help if you need it.
By following these tips, small businesses can overcome the challenges they face and continue to play a vital role in the American economy. To help you navigate these hurdles, consider taking advantage of the resources available and scheduling a free 20-minute clarity chat with me. Together, we can get you heading in the right direction with confidence.
*source: U.S. Census Bureau’s 2020 Economic Census