Want to know the biggest challenges facing small businesses? The National Federation of Independent Businesses may have at least a partial answer.
The NFIB’s Index of Small Business Optimism has been an invaluable resource since 1975. They’ve done research on everything — from job openings to labor markets, from capital spending budgets and the cost of inflation; on a monthly basis. Here are the biggest challenges presented in a recent report.
Lack of Capital/Cash Flow
The biggest challenge faced by small businesses in 2021 Small Business Trends was lack of capital/cash flow (23%).
Having limited resources as a small business owner is the rule, not the exception. Capital and cash flow are the lifeblood of a business, providing both operating cash and room to expand and innovate. Lack of them poses an immediate threat to the survival of a business.
Finding Customers
This first one isn’t just a small business problem. The marketers at well-known companies like Apple, Toyota, and McDonald’s don’t just sit around waiting for the leads to come in — even the biggest, most successful companies have people working hard every single day to find new customers.
The cost of acquiring new customers has increased almost 60% over the past six years. If this is something you’re struggling with, you’re not alone: 49% of companies report that customer acquisition is their primary marketing objective.
Lead Generation
Another problem most small businesses share is lead generation — specifically, generating enough leads to keep the sales team happy. Marketers also report that this is a top priority, but, at the same time, 58% also indicate that lead generation is a key challenge that business leaders face.
Given this, generating leads that are both high quantity and high quality is an important objective. A successful lead generation engine turns website visitors into prospective customers and provides a steady stream of sales prospects while you sleep.
Maintaining Online Presence
There’s no denying it: Everyone has a presence on Social Media. If you and your business don’t have an online presence, you are already missing a huge piece of cake waiting for you to take it.
To sustain your business, you need people to know about you, you need people to give their opinion on what you do and how you do. There’s no better place than the internet to spread your brand awareness. It’s an undeniable opportunity for you to share valuable content with your audience.
Fatigue
The hours, the work, and the constant pressure to perform wear on even the most passionate individuals. Many business owners—even successful ones—get stuck working much longer hours than their employees.1 Moreover, they fear their business will stall in their absence, so they avoid taking any time away from work to recharge.
Fatigue can lead to rash decisions about the business, including the desire to abandon it altogether.
Funding for growth
Funding is crucial for improving technology, hiring the right people, and launching a marketing strategy. Unfortunately, more than 2/3 of entrepreneurs find it difficult to gain access to capital they need to grow.
One reason is most small businesses fail and lenders are aware of this fact. To improve your chances of securing financing, it is critical to understand how a small business loan works. If a traditional lender is not an option, you might want to explore investors looking to buy a piece of your company or an alternative online lender.
Government Regulations
Each year it seems like the government’s collar around owners’ necks becomes tighter. One of those regulations deals with the environment. The Clean Air Act of 1990 forces you to remove air pollutants, and your vehicles’ contribution to smog, gas and other chemicals that crush the ozone layer.
While this act isn’t a bad thing, it is a challenge for business owners who don’t have the proper vehicles or environmental protection know-how.