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5 Common Small Business Challenges and How to Overcome Them

ByDennis O’Keefe,
business.com writer
| Last Modified
Feb 25, 2019
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> Business Basics
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Owning and operating a small business is a significant undertaking. From strategy and marketing to accounting and HR, your plate is probably overflowing most of the time.

As a result, less important issues can get swept under the rug. But even the smallest item can turn into an obstacle if it isn't addressed. Here is a list of challenges that many small businesses face, and tips on how to overcome them.

Challenge No. 1: Complying with HR regulations

According to a survey by the National Small Business Association, the average small business owner spends $12,000 or more each year complying with human resource regulations. Not only is compliance costly, but it also requires significant time. Some take more time than others; for 51 percent of those surveyed, overtime is their most burdensome regulation to navigate.

How to overcome it

Automate payroll. If you haven’t already, use a solution that will automate tracking work hours and overtime pay. This way, you can keep accurate time records for each employee and automatically calculate overtime payments and tax withholdings. By combining time tracking and payroll in a single platform, you can be confident that you are maintaining compliance while saving time and money.

Create resources. Thoroughly review your employee handbook and make sure it complies with the latest employment laws. Ask a lawyer to read over it if possible, as this proactive measure will cost you far less than a penalty for noncompliance. Share your handbook with each team member once it’s completed. Then ask them to sign an acknowledgment stating that they have read and understood the most recent version.

Challenge No. 2: Working with a small marketing budget

Building brand awareness for your business can be tough with a limited marketing budget. You need to stand out so your ideal customer can easily find you, but this can be challenging when your competitor is using more expensive channels.

How to overcome it

Build a plan. To take full advantage of your budget, create a marketing plan. Start by setting specific goals that will help you achieve your company’s objectives, like increasing your returning customers by 10 percent. Then, make a list of potential marketing activities and only pursue those that help you achieve your goal. Small businesses are often solicited for sponsorships and advertising, but before committing, make sure you can tie your investment to one of your objectives. It’s OK to say no, and always make sure you can track your activities.

Market creatively. Many digital services have a low or no-cost option that can help you effectively reach your target audience. For example, you can ask how your customers prefer to receive marketing messages and offers. You can then use that data to refine your strategy and spend money where it makes the most sense. 

If you've been using direct mail to promote your business, consider switching to email marketing, which performs 95 times better than direct mail and is much cheaper

You can also use blogging and social media to increase your exposure online organically. If you have room in your budget, expand your reach by boosting content or organizing a contest with your products as the prize.

Share the responsibilities. Not all marketing agencies require long-term commitments. Find a smaller agency or a professional who will work with you on a per-project basis instead of a year-long contract. Your costs will be more manageable, and you’ll have access to professional help when you need it most. 

Challenge No. 3: Dealing with distractions

As a business owner, you not only handle your company’s logistics and administrative requirements, but you also advise employees, answer phone calls, and reply to emails. With so many things fighting for your attention, it can be difficult to focus on your business.

How to overcome it

Remember the 80/20 rule. The 80/20 rule says that 80 percent of results come from 20 percent of the action. Identify the actions that produce the most meaningful results for your business and prioritize those over less critical activities.

Designate time. Sometimes you need to schedule time for your essential duties. Treat that time as if it were a meeting: silence your phone and mute your email notifications. You can even block off time on your calendar as a reminder.

Challenge No. 4: Compensating your employees appropriately

If your staff is leaving for higher paying jobs, there are significant costs incurred each time you hire and train a replacement. To recruit and retain good employees, you need to remain competitive in the job market. A report released by the U.S. Bureau of Labor Statistics found that 3.4 million U.S. workers voluntarily left their jobs in November 2018, often for more money in a new position. On average, job-hoppers saw a 30 percent higher pay raise than workers who stayed where they were.

How to overcome it

Offer personalized perks. Compensation extends beyond wages. Small businesses have the unique flexibility to offer specific incentives to employees. Consider simple rewards, like company swag, holiday bonuses, flexible work hours, or buying lunch for the whole crew during the busy season.

Try performance-based compensation. It might not be feasible to give your whole team regular raises or bonuses. Instead, try implementing a performance-based compensation system.  You’ll be able to align your staff’s individual goals with your business strategy and encourage your employees to exceed expectations.

Challenge No. 5: Burning out

Small business owners tend to work long hours and be involved in every aspect of the business. The nature of their work makes them highly susceptible to burnout and related health consequences, like depression and even heart disease. Here are some of the common signs you may be headed for burnout:

  • You're feeling exhausted and overwhelmed all the time
  • You don't sleep well
  • Your relationships seem to be suffering
  • You think about work even when you are not at work

How to overcome it

Delegate where you can. It’s difficult to take time for yourself with your substantial to-do list, so consider delegating less critical tasks. Some of your employees might be driven to take on additional responsibility. Capitalize on employees’ talents in your marketing endeavors. Good writers can help with blog content, organized individuals can take over event planning, and tech-savvy staff can design market research surveys. You can also use inexpensive project management software to keep track of deadlines and easily assign new tasks to your staff, so nothing falls through the cracks. 

Schedule personal time. Start small by scheduling gym time, a date night with your significant other, or a family game night. Remember: when you’re taking time for yourself, turn off your phone and don’t check email, so you come back to work refreshed and motivated.

It can be difficult as a small business owner to focus on growing your company while dealing with challenges. By using easy tactics, like offering personalized perks or delegating tasks, you’ll be able to overcome any challenge and have your most successful year yet.

Dennis O’Keefe
Dennis O’Keefe
See Dennis O’Keefe's Profile
Dennis O’Keefe is the Product Director for Workful, a new cloud-based human resources and payroll employee management suite made for small businesses. Dennis has a rich history in the payroll, banking and small business management space, with a specific passion for helping small business owners streamline financial and record keeping processes so they can get back to what they’d rather be doing, growing their business.
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