Starting a small business can be demanding. Small business owners today have many obstacles to overcome. This article contains the top three challenges that small business owners face and how to overcome them.
1. Healthcare Costs
With healthcare costs rising, this is a major concern for small business owners. According to the Business Leaders Outlook Small Business 2014 survey conducted by CHASE, two-thirds of small businesses reported not covering health insurance for their employees. Among the companies who do offer health insurance to their employees, cost control was a significant concern. When these employers were asked what steps they have taken to mitigate healthcare costs, a majority had shifted the costs to their employees by imposing higher deductibles or increasing their employees’ plan contributions.
This trend has been echoed in other research. In fact, according to the 2014 Benefits Strategy and Benchmarking Survey, conducted by Arthur J. Gallager & Company, the biggest challenge employers face is controlling benefit costs. While many of the employers in this survey reported shifting healthcare costs to employees as a cost mitigation strategy, 23 percent of employers surveyed reported contemplating a defined contribution approach within the next three years. Of the small percentage of employers who had already switched to a defined contribution solution, most noted cost and increased employee choice as reasons to switch to defined contribution.
2. Employee Recruitment and Retention
Recruiting and retaining top employees is another major concern facing small business owners. With the dynamic preferences of the workforce becoming more diverse, employers are in need of a more personalized approach to retain their employees. According to the Aurthur J. Gallagher & Company survey, the second largest challenge employer participants reported was attracting and retaining a competitive workforce.
According to the CHASE survey, 29 percent were very or extremely concerned about the limited supply of skilled candidates. When asked what strategies they were adopting to recruit and retain top employees, two fifths of small business owners reported offering higher wages to targeted candidates. Although many of these small business owners reported offering higher compensation, according to the CHASE survey, “Small businesses
are also about two and a half times more willing to accept lower skill sets at a lower wage to secure talent in place.”
Small businesses don’t have to accept lower skills sets. Alternative ways small businesses can recruit employees include using employee referrals, adding a career site to the company webpage, advertising on online job boards, recruiting interns, and using social media to recruit employees. Alternative employee retention strategies include creating a high-feedback environment, customizing benefits strategically, and boosting employee morale.
3. Attracting New Customers
Finding new customers presents more of a challenge to small businesses because they generally don’t have the astronomical budgets that larger corporations do. This can present a challenge when trying to compete with larger companies’ advertising and marketing strategies.
According to a recent Wells Fargo/Gallup Small Business Survey attracting customers/finding new business was the top concern for 21 percent of small employers. Ten percent of small business owners reported that the costs of running a small business made if difficult to attract customers and grow. According to the CHASE survey, attracting new customers was the chief strategy in sales and growth for more than three quarters of small business owners.
Strategies for sales and growth vary from business to business. Thirty seven percent of the small business owners polled in the Wells Fargo/Gallup survey reported using social media to connect with new customers.
Other strategies for attracting new customers include online marketing, search engine optimization and email marketing. It is vital for small business owners to have a deep understanding of what customers really want and educate customers on everything their small business has to offer.
What are your biggest business challenges? Leave a comment below.