Challenges of being a small business owner

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The challenges faced by small business owners can be varied, with some harder to overcome than others.

Recent analysis from Experian have shown that “4% of new businesses have ceased trading by the end of the first year of operations - failure rate rises significantly to more than a third (34%) by the end of the second and to half (50%) within just three years of opening”. These are startling statistics to consider for anyone looking to launch a new business, but it’s also important to remember that finding success as a small business owner can be a massively rewarding venture, as long as you’re prepared for challenges as they come and consider the responsibilities of wearing multiple hats. 

To support start-up business owners taking the plunge into self-employment, we recently spoke with some of our own customers who successfully run their own businesses about some of the challenges they’re currently facing as they navigate the current landscape and how they’ve managed to overcome them. 

Work/ Life Balance

When you’re the Director or CEO it can be hard to draw the line between work and personal life sometimes, especially if you’re passionate about what you do. This is a challenge Keeley Smith, Founder of Keeley Smith Virtual Business Support has had to overcome, who commented  that “it’s easy for your own business to be all consuming - you have a vested interest after all - but I try to regularly remind myself what I’m doing it all for, down tools and walk away from the laptop at a reasonable hour for some "me" time”. Making sure you factor in down-time away from your work is essential in preventing burnout which can have a detrimental impact, not just on your business but your own mental and physical health.

Expanding Your Skillset 

As mentioned previously, for business owners and directors at times you’ll be expected to wear many hats, from HR to Financial Director. Being able to switch between these various disciplines can seem daunting. Barbara Bradbury, Managing Director of Halland Solutions noted that “being responsible for everything – admin, finances, marketing etc. as well as delivery” was one of the main challenges she faced as a business owner.

Until you have the capital and funds to expand your team and bring in people who can manage these roles, it’s always advisable to invest in your own training (e.g. courses, qualifications etc.) as much as possible and expand your skillset so you can feel more confident in switching between alternate tasks. Also, utilising your own professional network can be a massive help when facing this challenge, as you may find that your peers could provide you with the tools and knowledge you need to overcome this particular challenge.

Managing Finances

Making sure that you have enough money in the bank to keep your business afloat, pay yourself, your employees and invest in the future of your company is a key anxiety for many business owners. As the country continues to navigate the cost of living crisis, many business owners have felt the pinch too and have had to pivot in order to survive. When asked about the biggest challenge faced by his business, Simon Morgan – Creative Director of Bread and Butter Creative mentioned that “making sure we had enough money in the back to pay freelancers and wages” was the biggest challenge he had to overcome. Effective forecasting, planning and budgeting will be key in giving your business the best chance of surviving into the long term. If you’re just starting out, we highly recommend you check out our recent article on the top five accounting apps for self-employed & freelancers to make sure you start off on the right foot.

It's also important that you understand the market rate and value for the services you are providing. This was a challenge faced by Lucinda O’Reilly, CEO of The International Trade Consultancy who highlighted that “I was too expensive to begin with and then went too far in the other direction - these mistakes definitely held back the growth of the business at the beginning”.  Before marketing your product or services, always keep an eye on the market to make sure you’re not only providing proper value for the money you’re charging, but that you’re also getting a fair deal for your hard work.

Make sure to check out our Support Services here to see how we can assist you through challenging times with legal advice and much more.

Positioning yourself as a leader

As a business owner, you will be the focal point for your employees to provide guidance when needed, effective communication and direction. As Taheera Lovell, CEO of The TLC Group of Companies Ltd. points out; “it’s one thing to motivate and direct yourself, very different focus and skills needed to lead others”.  Some people are natural leaders, for others it’s a skill that must be nurtured and developed. 

So, what challenges will you face as a leader? One of the main challenges for our business owners is the ability to prioritise. As employees look to you for direction it’s important to make sure you’re directing your energy to where it’s needed most. Managing priorities is a challenge Iain Steel, Director for Beneffrey Consulting Ltd. has had to overcome in his own business. He outlines that “one of the most significant pain points in running my business is managing the balance between the activities required just to keep the business running, client expectations and resource limitations. Ensuring high-quality service delivery within the constraints of time and resources requires meticulous planning and effective communication”. Striking the balance between managing core activities effectively, resource limitations and time will be key to the success of any business owner, especially if you’re just starting out. 

Another aspect of being an effective leader is knowing when to delegate and rely on the expertise of your team members, especially when prioritising tasks. Nick Shanagher, Business Adviser for Shanagher found this to be the biggest challenge he had to overcome as a leader, pointing out that “there are so many things to learn, and it is easy to focus on the wrong priorities and to pay too much attention to sunk costs. I am lucky to have found a network of advisers who help me learn and recover from my mistakes”. Making sure you have a solid team and network around you that possess a varied skillset can be the deciding factor that takes your business growth to the next level and is a core element of being a strong leader.

For more information on how to lead your staff through challenging times, check out our guide on “How to effectively manage your staff through change”. 

Maintaining resilience through hard times

With all of the responsibility that comes with leadership, it’s easy to feel overwhelmed, especially if you’re managing the careers of your wider team. For Tracey Warren, Founder of True Path Careers Ltd., building a strong resilience was a key factor in her overcoming challenges and finding success. She mentions that “navigating the highs and lows and keeping going when enquiries are slow, which they inevitably will be at times for most small businesses” was a major challenge she had to overcome, only by developing a resilient nature and facing the hard times head on. 

For Rob Edwards, Executive Coach for Lifestyle Coaching, navigating the COVID-19 pandemic was challenge he faced as a business owner that built resiliency as well as the skills to adapt and pivot in business, noting that “when the COVID pandemic hit. I was well established at this point with a strong client base, but literally overnight, all of my face-to-face engagements - coaching, training, workshops, keynote speeches - were cancelled, and what was looking like another good year, suddenly looked very different and very difficult indeed. I had to adapt and adapt quickly. 

As a business owner, challenges will inevitably come, and some can’t be avoided. Speaking with our customers provided us with an excellent insight into the common challenges they’ve faced and the best approaches they took to navigate their way through them. Although at times these challenges can seem insurmountable, developing a resilience and faith that you can weather the storms when they come will provide you with the core tools needed to build a successful future.

For more information on how to maintain resilience and manage your mental health, check out our guide on Mental health and self-employment: How to self-care.

We will be shining a spotlight on Small Business Owners, self-employed, freelancers, and side-hustlers to find out what it takes to run your own business and what entrepreneurship really means in the UK today. Visit our startup hub and don’t forget to follow our hashtags #StartingUp2024 #SmallBusinessOwners for business startup news and guides.

*This blog is if for information only and not intended for the reader to rely upon when making important life/business decisions and that professional advice should always be sought in such circumstances.

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