8. Consumer education.
Educating the public about our services, overnight baby nurse care — a relatively new and un-aggregated service in the DC Metro area, was a challenge. Newborn care is a market consumers either assume is not accessible to them, or feel guilty using because they think reaching out for help when their babies are born is “weak.”
Solution: We use social media to reach our audience on a personal level. Twitter makes us immediately accessible to families needing assistance overnight and Facebook allows our families to reach out to one another, in addition to our company. Our nurses also provide content for health and parenting websites, and we built our own in-house App (LMSLive) to share information between the nurses and families. For many, becoming a new parent can feel isolating and confusing. Our involvement in social media helps alleviate the feeling of being alone and helps build parental confidence.
9. Reaching B2B decision makers.
We are a B2B company, so the hardest part for us is reaching people inside each business who actually use our products.
Solution: We’ve built a list of ideal clients and are working on completing mock-up designs that we can send along with our cold letters and emails. We are also reaching out to our existing contacts in the HR and PR spaces to see if they know anyone else who could use our products.
10. Managing cash flow.
It took me a long time to realize that profit does not equal success. Many profitable small business fail because they don’t pay close attention to cash flow.
Solution: I learned this lesson the hard way a couple of times when I had to put personal money back into the company to keep the business alive because I wasn’t watching cash flow closely. Today, I pay much closer attention to my cash flow and work to keep inventory in-check, not letting product sit too long and ensuring inventory turns match cash flow estimates.
11. Operating during lean and unprofitable times.
My company started in 2004 but it wasn’t until 2010 that we started to bring in a profit and actually see growth. Before then, there were many times we were unsure if we could even make payroll.
Solution: Staying motivated to make my company a success, along with using my experience as a financial advisor helped the Source Consulting team to continue to push ahead in order to gain new business. We soon began to offer a more robust service offering–which includes parcel audits, carrier negotiation and shipping technologies. As an entrepreneur, I believe that business owners need to be ready to meet challenges, especially financial ones, head on in order to prosper and find success.
12. Being an Asian, female entrepreneur in a Caucasian, male-dominated industry.
Two years ago, I quit my 9-5 job as an audit manager from a regional firm and started my own entrepreneurial journey. The biggest business challenge I had was gaining my first client. The hedge fund industry is historically a Caucasian male dominated industry. Therefore, being a relatively younger female Asian business owner, I struggled with landing my first client.
Solution: Instead of selling directly to customers, hedge fund managers, I went to other hedge fund service providers who I knew and built the relationship with them. I talked to law firms, prime brokers, and fellow CPAs. I piggy-back on their established reputation and relationship and made a the sales process much easier.
Amy Zhang, CPA, Managing Member at Affinity Fund Services LLC
13. Doing everything ourselves.
As brothers and co-founders of Bully Boy Distillers, Boston’s first craft distillery, we were both working successfully towards established careers in corporate America prior to launching our company. At first we tried to take on everything together, thinking we could do it all in half the time.
Solution: It quickly became evident that we would have to choose tasks based upon what was more in line with our skill set. While we still team up on things such as social media and packaging, by and large we each do half the work full-time and are far more efficient.
14. Balancing working capital with expansion capital needs.
For a consumer products company like ours that deals with wholesalers and product manufacturing, balancing the need for working capital and an ongoing supply of cash for our business was the single biggest challenge early on. We were turning away business because we didn’t have the cash on hand or ability to accept large orders.
We were growing so quickly we exceeded our bank line of credit and we were relying on our vendors to allow us to pay slower until we collected from our customers. Our business was at an early growth stage and we weren’t willing to give up part of the ownership in our business to receive equity financing. We realized that in order to grow quickly without having cash tied up in equipment and inventory purchases, we had to find a creative way to reduce overhead costs associated with our accounts receivables.
Solution: We decided to use factoring, the process of selling your accounts receivable for immediate cash and the factoring company worries about collecting from your customers. It enabled us to accelerate our company’s cash flow and was the perfect solution for us because our company was too young to show three to five years of historical financials to support a traditional loan. We also didn’t have the tangible collateral that met the loan amount needed to fund our large orders. This approach gave us the opportunity to have sufficient cash flow on hand to accept new orders, hire personnel, receive vendor discounts and make payroll on time.
15. Fear of unfamiliar marketing strategies — specifically Internet marketing.
I owned 5 mall-based perfume stores with my husband that we had to shut down 5 years ago. As we closed our brick and mortar stores, we launched an online perfume website. My husband handles operations (i.e. inventory management, etc.) and I promote the company (i.e. marketing, sales, etc.). My biggest challenge was conquering the fear associated with promoting my new perfume website online, since I had no idea of how Internet marketing works.
Solution: I spent numerous nights learning about internet marketing and kind of threw myself out there in social media. This lead me to growing our Twitter following to over 51,000 followers and acquiring 7,500 Facebook fans. I also set out to achieve personal goals, and competed in the Mrs. Wisconsin Pageant in 2011 — making history by winning 3 out of 5 awards. This recognition landed me a lot of media and publicity and the best part is — my perfume company’s website was always mentioned. Today I receive orders from all over the world — as far as Australia and all over Europe!
What has been your biggest small business challenge to-date and how are you overcoming it? Let us know in the comments section below.