Essay Question: What challenges will small business owners face in the next decade, and what can they do to overcome them?
The small business owner is the quintessential heart of American business. Since the foundation of our nation, business owners have truly represented the American dream. Small business owners have been a strong source to the nation’s economy. It is very difficult to start a business and even more challenging to have it succeed. Creating a small business has always been demanding, simply finding the time, passion and commitment to nurture the business is quite consuming.
Despite these issues, small business owners must also adapt to a growing society where technology and corporate giants dominate an ever-changing economy. Small business owners are now faced with nearly impossible challenges. According to a 2015 report from the U.S. Small Business Administration Office posted on their website www.sba.gov, “67% of small businesses survive the first year and 79.5% of those survive throughout the second year.” So, how does the small business owner overcome their challenges?
Winning the competition for consumer dollars is integral for the survival of the small business. As a result, these entrepreneurs must rely on their education, business savvy and the ability to be one step ahead of big chain corporations. It is no longer enough to be an honest, family-friendly business that functions in a specialized market. While it is essential for small business owners to maintain a high-level of integrity, they must also strategize.
Many small businesses fall into a niche market, and owners need to assure that their customers not turn to big chain companies like Walmart or Amazon that offer more products at a lower cost. Small business owners will need to find creative solutions to add value to their customer’s experience while not
increasing his or her operational overhead.
The business owners must capitalize on what makes them different from large corporations: personal customer service. This is one aspect of business that larger companies fail to fulfill; small business owners have a great sense of pride and create a strong rapport with their customers. However, this is not enough as these business owners will have to rely on research and development to stay ahead of the game.
They must ensure that their product lines will not go stagnant while providing unique customer experiences. As a result, they will have to be familiar with their product lines, demographics and markets. Also, for those business owners who offer an original product, patent protection is an absolute necessity. This is a costly and time-consuming process that does not always protect the proprietor.
Growing one’s business is also key; however, for the successful entrepreneur, the rate of growth can be challenging. Growing sales too fast can strain a business causing failures to meet demand; thus, damaging the corporate image. While growing the size and inventory, pre-sales can lead to financial disaster. This is a very difficult challenge in an “instantaneous” world where online companies can deliver in 24 hours and provide comparison pricing.
This proves to be a large issue for small business owners. Again, creative planning can allow them to remain competitive. Offering competitive shipping and hands-on assistance can add a personal touch to the small business. These owners need to set themselves apart by offering exceptional customer service. Additionally, selling products with online corporations like Amazon and eBay will allow small business owners to reach a larger audience.
This is a double edge sword because such large online corporations provide opportunity for vendors; however, smaller businesses are forced to work within competition that can control their prices. Outside businesses must specifically plan to sell at the lowest price in order to make them stand apart from the many other sellers on the site. In this area, small business owners must achieve an attainable balance that allows them to remain competitive while still making a profit.
In order to survive, the business owner may have to take on an investor or debt to fulfill orders and grow their research and development. Unfortunately, this option leaves the owner with the question of: How much equity do I want to retain? Finding capital investments can help support and grow the business; however, retaining control and financial solvency may suffer. The business owner will have to determine the best solution for their company.
Taking on an investor can add resources from a financial and productivity standpoint; however, it also adds an additional outside voice to the company. Different perspectives can change the direction of a company. Also, giving up equity is a limited resource that ultimately cuts into the small business owner’s profits but pivots on the aspect that there will be a much greater scale of sales.
Government regulations create a large issue for the small business owner. Regulations such as the new healthcare laws can be a significant problem for a small business. These regulations can deter business growth, especially if they directly affect the workforce, i.e. healthcare and minimum wage increases.
These regulations not only affect the workforce, but they also increase the cost of doing business. Since the small business owner relies on personal communication with their customers, the government regulations can force owners to downsize their staff. This forces the owner to make the difficult decision between maintaining their quality of service and meeting their weekly payroll.
Often small business owners are not given a choice. They are mandated to fulfill employee regulations. As a result, some employees as well as the actual business will suffer. It is important to assure that small businesses succeed. According to the U.S. Small Business Administration Office, “U.S. small businesses employed about half of the nation’s private workface in 2012 or about 56.1million people.” This proves that small businesses are important to our nation’s economy. As a result, small business owners need help maintaining government regulations to assure that their workers remain employed.
Flexibility is key to today’s small business owners. It is essential to be open-minded. Their ability to react to the changes in the market can be their greatest problem and greatest advantage. If a small business owner can quickly change and shift with market needs, they can stay ahead of big corporate companies. Larger corporations struggle with their internal size and bureaucracy. These companies are unable to adapt to the needed changes as readily as the small business owner.
One example is 3D printing. A number of smaller companies have emerged and began producing these machines over the last five years. Corporate printing giants like HP are still in development. These type of situations are beneficial to the small business owners. Small business owners must seize the opportunity to fluidly function better than the corporate giants proving that the personal touch can outweigh mass production.
Another aspect of flexibility is the small business owner’s ability and willingness to create an online presence. Utilizing social media is key to marketing. Simple word of mouth and advertising is no longer enough to attract a consumer base. Since Americans are attached to their cell phones and electronic devices, it is essential for small business owners to jump on the information superhighway.
Adding social media to current advertising techniques will allow the business owner to quickly reach a much larger audience. While websites are important, they are not enough in today’s society. Small business owners need to maintain multiple communication channels to their customers.
Today’s small business owners face many challenges to survive in a very competitive world with the advancement of technology serving as key to corporate business. Data, research and information is available in seconds. Corporations have teams of people calculating data and strategizing their next moves. As technology changes daily, the small business owner must persevere, not only in the next decade, but on a daily basis.
However, maintaining product quality, business integrity and the ability to take advantage of corporate flaws will allow the small business owner to succeed. Overall, small business owners need to work extremely hard to follow every path to reach new clients while maintaining their original customer base. Determination, hard work and strategic financial planning have always served as the basis for small business success.
In the decade to come, small business owners must work twice as hard to reach their business goals. With large corporations and new technologies growing daily, small business owners face ever-changing challenges. The small business owner can no longer rely on word of mouth, a strong work ethic, and quality service. It is imperative that they develop an all-encompassing business plan that defines the vision of the company; budgeting and marketing; its workforce needs; real financial statements and forecasts; potential problems and an analysis of competitors. This plan must be carried out and reviewed and adapted on a regular basis.
All of these factors are essential in order for the small business owner to create a presence that will continue to attract customers to their personal and unique environment. Imagine what society would be like without small businesses. It is essential that consumers preserve small businesses in order to maintain a level of personal sales and personal
interaction in our very impersonal world.
Ms. Katelynn Christian submitted this winning essay in 2016 for the Rain Control Works Scholarship.