9 Business Challenges Every Small Business Struggles With (And How to Fix Them)

In the first few years of business, small companies come up against a lot of different challenges. Some are harder than others to overcome — and according to the U.S. Bureau of Labor Statistics, about 20% of small businesses fail by the end of their first year. By the end of their fifth year, 50% go under; and by the tenth year, that number rises to 80%.

With survival rates like that, it’s easy to understand why folks face the first few years of business with trepidation. But in fact, many common business problems and challenges are actually fixable. Many times, you’ll find you need to take a step back, take the time to understand the pain points you’re feeling, and re-think your strategy.

Here are several challenges every small business faces, along with some tactical advice about how to fix them.

1. Finding Customers

This first one isn’t just a small business problem. The marketers at well-known companies like Apple and 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.

But for small businesses that aren’t a household name, finding customers can be particularly difficult. For example, there seem to be so many channels you can choose to focus on… How do you know what to prioritize and where to allocate resources?

How to Fix It:

Finding customers starts with figuring how who your ideal customer actually is. Spraying and praying doesn’t work for anybody — you need to make sure you’re spreading the word to the right people.

Craft an idea of what your target customers look like, what they do, where they spend time online by building your buyer personas.

Creating very specific ones can dramatically improve your business results. Once you’ve built your buyer personas, you can start creating content and getting in front of your target customers in the places they spend time online and with the messages that they care about.

2. Increasing Brand Awareness

If your customers don’t know who you are, they can’t buy from you.

It can sometimes seem like today’s biggest brands seemed to have popped up out of nowhere. How did they become a household name? How did they grow that quickly? Can your business grow like that, too?

Of course, most of these companies’ hard work, failures, and rejections happened behind the scenes. But there are strategies for spreading the word about your brand and building a great reputation that you can start right away.

How to Fix It:

There are many ways to spread brand awareness, but the three I’ll touch on here are PR, co-marketing, and blogging.

• PR: Public relations is less about paying for a spot in a news blog, and more about focusing your voice and finding your place in the market. I recommend reading this great post from FirstRound Capital on what startups and small businesses often get wrong about PR, which also includes some great, tactical tips on how to figure out who’s covering your industry, building relationships, and working with reporters. You can also download our free public relations kit to learn how to maximize your public relations efforts with inbound marketing and social media.
• Co-marketing: Partnering with another brand will help you inherit some of their image and reputation and create brand evangelists outside your circle. It’s a fantastic way to gain a large volume of new contacts alongside your organic marketing efforts. You can read our ebook on how to get started with co-marketing for more helpful information.
• Blogging: Running a consistently high-quality blog will also help you build brand awareness. Not only does a blog help drive traffic to your website and convert that traffic into leads, but it also helps you establish authority in your industry and trust among your prospects. It’ll also help you build an email list, which brings us to our next point…

3. Building an Email List

In order to move prospects along their buyer’s journey to eventually become your customer, you need to build trust by staying top of mind and providing value consistently. 

That starts with getting prospects into your email list.

As if it isn’t hard enough to build an email list, the average marketing database degrades by about 22.5% every year. 

That means you have to increase your email list by almost a quarter to just maintain it, never mind grow it. It’s the marketing team’s job to find ways to constantly add fresh, new email contacts to your lists.

But what many people call “building an email list” is actually buying an email list — and buying an email list is never a good idea. I repeat: Never a good idea. Not only will your email deliverability and IP reputation be harmed, but it’s also a waste of money. If your current strategy is to buy or rent email lists, then it’s time to regroup and find better places to put those resources.

How to Fix It:

Instead of buying or renting lists, build opt-in email lists. An opt-in email list is made up of subscribers who voluntarily give you their email address so you can send them emails.

The act of opting in necessitates website functionality that captures their email address. This can be achieved with a form builder or other conversion tool (more on that later).

The other piece of the puzzle is creating demand. You can do this by creating great blog content and making it easy for people to subscribe — which, at the same time, will help you increase your online presence, build up search authority, and create evangelists from your content.

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You can also revive older lists that you think are mostly decayed by creating an engaging opt-in message and sending it to your old list encouraging contacts who wish to re-opt-in and promising to remove all contacts who don’t respond.

Growing your email list doesn’t necessarily translate into growing your list of sales-qualified leads, which brings me to my next point…

4. Lead Generation

Another problem most small businesses share is lead generation — specifically, generating enough leads to keep the sales team happy.

But generating leads that are both high quantity and high quality is a marketing team’s most important objective. A successful lead generation engine is what turns website visitors into prospective customers and provides a steady stream of sales prospects while you sleep.

How to Fix It:

To make the lead generation process work for your business, you need to first optimize your existing website for conversions. Your website is the most important tool you have for turning prospects into customers. Look through your website and ask yourself:

• Do each of your webpages clearly guide visitors to take action, or do they leave them wondering what to do next?
• Do you use a tool that automatically pulls the submissions from your forms and puts them into your contact database, like HubSpot’s free lead generation tool?
• Are you creating custom landing pages for every single campaign that you run?
• Do you have lead generation CTAs on each of your blog posts? (Do you have a blog at all?)

Prioritize the most popular pages on your website first. Most businesses have a few, specific pages that bring in the majority of their traffic — often the homepage, “About” page, “Contact Us” page, and maybe one or two of your most popular blog posts. Read this blog post to learn how to figure out which pages to prioritize, and how to optimize them.

Then, implement conversion tools such as: 

Finally, be sure to take advantage of free lead management software and apps for startups. Affording marketing in general is a big challenge in and of itself, so finding and implementing the most robust free marketing tools can be a game changer.

5. Delighting Customers

Customer satisfaction is a great goal, but customer delight is even better. After all, delighted customers are the ones who buy from you again, write testimonials and agree to case studies, and refer you to people they know. 

In order to achieve true customer delight so that your customers become promoters of your business, you must surpass expectations and deliver an unmatched experience.

How to Fix It:

It takes work to continue solving for your customer in a way that turns them into raving fans. Here are some steps get you in the right mindset: 

• Understand why your customers chose you and what they need
• Set concrete expectations at the start of the engagement
• Deliver on those expectations (and satisfy your customers’ needs)
• Innovate how you can provide unexpected extras that go above and beyond
• Continue to measure satisfaction and improve the customer experience

6. Hiring Talented People

None of the above can happen at scale without a fantastic team that understands your vision and supports your efforts.

Hiring is often one of the biggest challenges for small businesses, especially since small business executives tend to feel under-resourced to begin with. Hiring new employees is a big deal and a complex process, and the cost of onboarding is an average of over $4,000 per new employee for most companies. And if you don’t hire well, employee turnover can be very, very expensive.

But, as CEO of 2020 On-site Optometry Howard Bernstein said, it’s impossible to know everything yourself. That’s why finding and hiring the right people — and the people who are really excited about what you’re doing — matters.

How to Fix It:

It’s easy to hire with a short-term mindset: send out a job description, screen applicants, and make a decision. But because of the high costs of hiring right, it’s important to invest a significant amount of time in the hiring process. Don’t settle for good employees when you can find great ones, even if it takes longer. It’s the great employees that will help your company get to the next level.

Just like you create buyer personas for your customers, create candidate personas for your job candidates. Your personas should be different for each new role that you’re hiring for, but will share some underlying traits around company culture.

Next, take ownership of attracting candidates to your company’s brand and make them interested in learning more. This will help you build a recruiting pipeline that will give hiring the same predictability as sales. Then, turn those leads into applicants.

7. Managing Workflow

Once you have the people in place to make the magic happen, the next challenge is managing workflow as you scale. You want to ensure that your team has the processes and tools to do good work and do it efficiently. 

At the same time, you can’t be everywhere at once as a business leader. So how do you focus on the business while ensuring that everyone working in the business has what they need?

How to Fix It:

The best ways to diagnose the roadblocks your team faces and increase efficiency is by creating ways for them to provide feedback. This can be done through: 

• Employee satisfaction surveys
• Frequent one-on-one meetings with direct reports
• Ensuring your direct reports implement one-on-one meetings with their direct reports
• Occasional skip-level meetings
• Asking about threats to the business and the issues that give them the most “pain” in their roles
• Finding the commonalities in the feedback you receive and the bottlenecks

8. Financial Planning

In theory, more resources (whether it’s people, tools, or time) increase efficiency and quality. Creating smooth operations starts by providing all the resources you can to your team. 

It sounds simple in theory, but did you notice the caveat, all … you can? Unfortunately, business leaders have budget restrictions based on revenue and margin. 

It, then, becomes a challenge to improve efficiency while working within certain limitations, investing in your business without over-spending outside your means. This is solved by making good decisions based on solid financial planning.

How to Fix It:

Every business will be different, but you’ll want to use business credit wisely, cut costs where possible, and manage cash flow by staying on top of invoices and bookkeeping. Business accountants and financial advisors can help you analyze your financial situation and help you make good decisions.

9. Scaling

“There’s this mix of building scalability early, versus doing what you have to do to get it all done,” according to Nick Rellas, co-founder and CEO of Drizly.

This is a tricky one, especially since every situation is different. You’ll see this problem arise in all areas of business: in product development, in marketing and content creation, in hiring, and so on.

For example, many business executives will push growth at all costs. But if you grow your company too quickly, you’ll find yourself having to hire quickly. This can overwhelm your experienced team members because it takes a while to train people. And if you don’t train people well, it can end up backfiring.

How to Fix It:

Unfortunately, there’s no perfect answer here. “Depending where you are in your business’ lifecycle,” says Rellas, “the scale will tip one way or the other, but I do think you need both at different times.”

What it comes down to is not obsessing over every detail, but obsessing over the right details. Obsessing over product perfection, for example, might not be as important as obsessing over customer service. It’s better to put your fears aside and launch a product that isn’t perfect because you can always update and improve it. After all, once your products are in the hands of your customers, you can learn much more quickly what’s working and what isn’t.

Obsessing over customer service, however, is worth the extra effort. Amazon CEO Jeff Bezos puts it well in his 2016 letter to shareholders: “There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”

(“Day 1” is what he refers to as a period of growth and innovation, whereas “Day 2” is stasis, irrelevance, and slow demise.)

While these are just a few of the many business challenges facing small businesses every day, there are many others out there. Many of them can be planned for and mitigated with the proper planning and strategy.

Editor’s note: This post was originally published in July 2018 and has been updated for comprehensiveness.