Starting a business is a major milestone in anyone’s life, up there with marriage or the birth of a first child. However, as with anyone who’s taken their vows or gone into labor, any business owner will tell you that the real trials haven’t even begun. Starting a small business is hard. Maintaining one is even harder. The teething pains that the market giants have long since outgrown and forgotten can easily make you question, or worse, regret all your sacrifices and spent effort if you don’t know what you’re getting into.
But, if a strong sense of competition is what drives you to start your own business, then perhaps these challenges will simply provide welcome opportunities to test yourself.
If that’s the case, prepare to have the time of your life.
The beginnings of many would-be businesses are often as formulaic and predictable as a superhero origin story in a comic book: a tired office drone manning his cubicle is suddenly struck with the realization that since he’s a whiz at the technical part of his job, surely he’d be just as good at running the show!
Which, is understandable enough, given how entrepreneurship is practically synonymous with what we like to believe about America: independent spirits, strong work ethic, and the right to determine one’s own path in life. And it’s common enough that it’s been dubbed the Entrepreneurial Myth.
Why “myth’? Considering the axiom that most start-ups are doomed to failure, it’s plain to see that technical expertise isn’t enough in a new business owner. Solid management skills are just as, if not more, integral to a start-up’s survival than raw passion and ability. While most new business owners are great at specific tasks like guerrilla marketing or cost containment strategy, they’re often untrained or unprepared for day-to-day operations, which are akin to fighting a hydra: take care of one problem and two more arrive to take its place. Unless you’re able to manage yourself and your employees into effectively and efficiently handling these continuous demands, seemingly trivial matters will quickly overwhelm you.
Founder Fatigue & Dependence
Given the extreme lengths we go to in order to even start a business, we can be forgiven our reluctance to ease up on the reigns once things get up and running. Your brand is your baby, after all, and it’s your responsibility to see it grows up right. But the constant micromanagement of minutia takes a toll on even the most dedicated individual. The fear of not being in control leads many business owners to work much longer hours than their employees and take far less days off.
Without adequate time to recharge, fatigue will inevitably creep in. This stress can impact your better judgment and lead you to make rash decisions that benefit no one. Over time, this might even lead to a desire to give up completely. Learning to let go of certain responsibilities is crucial. In addition to easing your overall burden, sharing the work reduces your team’s dependence on you and allows the company to operate in your absence. Like when you’ve finally gone on that nice, relaxing vacation you’ve earned for example.
This one’s a no-brainer. Spend money to make money, right? Healthy capital and cash reserves are needed if you want to avoid under-capitalization. It’s tempting to blame money trouble on recent economic times, but more often than not it’s just a lack of foresight on the new business owner. A good rule to follow is to make sure you have access to reserves equal to at least the projected revenue for the first year in addition to projected expenses. So if you’re hoping to make $50,000 in cupcake sales in your first year while spending only half that in initial expenses, then be sure to have at least $75,000 on hand. Because that is both a lot of cupcakes, and failure to do so could make you liable for all debt incurred if the worst comes to pass and you end up filing for bankruptcy.
Simply put, running out of cash makes running a business virtually impossible. So get to baking. Or, alternatively, you can start with having a primary source of income while you’re building your business. Having to juggle your start-up with a steady job won’t be easy by any means, but nothing about entrepreneurship is meant to be. And get a bookkeeper as soon as is practical. I’m sure you’re great at numbers, but professional help is almost always preferable.
Paradoxically, the small business is often slower to adopt change than larger companies, when its smaller size should allow it to adapt to a changing market much quicker. This is because what is usually attributable to the growth of a new business becomes impractical when demand suddenly skyrockets. If your own perfectionist attention to detail on the frosting earns your cupcakes a feature on a popular publication, be prepared to either turn away potential customers, or sacrifice your personal touch to accommodate all the new publicity. The hiring and proper training of reliable employees, as well as taking inspiration from more successful business models, help navigate the middle ground between quality and quantity.
These are the universally applicable challenges to small business, relevant in almost any situation. Harder to predict and navigate are the hurdles brought about by larger outside forces, such as the unknown impact of healthcare reform on insurance costs or the effects of the increasing cost of commodities. With an expected 3-4% increase in the price of groceries over the next year, you might find yourself cutting the coffee and donuts out of the weekly team meetings. And really, that’s just unpleasant for everyone.
These problems are tough, but they are not insurmountable. It’s better to be aware of them before you even start considering a business than to rush blindly ahead thinking you’ll figure it out as you go along. It’s a sobering thought to look at the statistics, at all the start-ups that have crashed and burned, but if there’s one thing every starting entrepreneur should know, it’s that while failure is an omnipresent reality in business, it’s not the end of the world. Even a failed business will provide you with valuable experience and perspective, which can be turned into a far greater chance of success should you decide to try again. The networks you’ve established while running your business can land you a lucrative position within a larger company or a partnership in a more successful start-up. This ability to mitigate and manage failure is characteristic of any society that’s proven able to adapt to the rapidly changing world around it, where enterprises can fail, but people can still succeed.Angie Picardo is a staff writer for NerdWallet. Her mission is to help small businesses save money and time with NerdWallet’s business credit cards.