In the first few years of business, small companies come up against many different problems. And – you’ve probably guessed it – some are harder than others to overcome. According to Shopify, the average annual business rate of business failure from 2019 to 2023 (for companies started only half a decade ago) is a scarily small 12.1%. This means that between 2018 and now, starting a small business hasn’t been the easiest task; if anything, it tells us that maintaining a business is a hell of a lot harder than starting one.
With this potential fate looming over small business owners, it’s easy to see why people face their first few years of ownership with trepidation. However, many common business problems and challenges are actually fixable if you take a step back, assess your pain points, and rethink your strategy.
In this post, I’ll discuss common challenges that small businesses may face, along with tactical advice about how to fix them.
Common Small Business Challenges (with Solutions)
1. Find the right customer(s).
This first one isn’t just a small business problem. The marketers at well-known companies like Apple, 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, the challenge is even more significant. How can you find customers when you’re not a household name? And, there are so many channels to focus on for acquisition, but how do you know what to prioritize?
In addition, for small businesses, all the little things matter, especially when it comes to customer acquisition. If this is something you’re struggling with, you’re not alone. Even bigger, more trusted brands have trouble navigating this. With new customers, brands/companies cite that with new customers, the chance of closing a sale is just 5-20% (versus a 60-70% chance when selling to an existing customer).
Here’s How to Fix It:
Finding customers starts with figuring out who your ideal customer is. Even with the best small business ideas, spraying and praying doesn’t work for anybody — you need to ensure you’re spreading the word to the right people.
Want my two cents? Build your buyer personas to get an idea of what your target customers look like, what they do, and where they spend time online. This free guide will walk you through the process and provide customizable templates to fill out and create representations of your ideal customers.
Creating very specific templates can dramatically improve your business results. Once you’ve built your personas, you can begin creating content that caters specifically to your target demographic and share it in the channels you know they’re in with the messages you know they care about.
2. Increase your brand awareness, reap the rewards.
If your customers don’t know who you are, how will they buy from you? Statistics from NerdWallet’s 2024 Small Business Report show that, in terms of small business success, 54% of SMB owners say that building an audience of loyal customers is one of the biggest challenges they face currently. This issue is likely due to a lack of strong brand awareness, which limits customer recognition, trust, and engagement with their business.
As a small brand, it can sometimes seem like today’s biggest names 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 good word about your brand and building an excellent reputation that you can start using right away.
Here’s 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:
1. Public Relations (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 post from HubSpot about how startups and small businesses should do PR. The piece also includes some tips on how to design an effective strategy that works for you, define success metrics, and the types of avenues to take when building out your PR approach.
Pro Tip: You can also download HubSpot’s free public relations kit to learn how to maximize your public relations efforts with inbound marketing and social media.
2. 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.
Pro Tip: You can read HubSpot’s ebook on co-marketing for a more guided walkthrough on how to get started.
3. Blogging
Running a consistent, 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 enables you to 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. Don’t buy an email list; build one.
To move prospects along their buyer’s journey to eventually become your customers, you must build trust through consistent nurturing, stay top of mind, and continuously provide value. Marketers say that one of the best ways to do this is to get prospects on your email list with a killer template.
Plus, as revealed by HubSpot’s 2024 State of Marketing Report, email marketing remains the fourth-ranked channel for generating the highest ROI. Additionally, marketers are saying that email marketing is one of the most effective channels for driving conversions, with a 2.8% conversion rate for B2C brands.
With this information in mind, as a small business owner with a marketing team (hopefully, and if not, find one ASAP), it’s your job to collaborate with your marketing specialist(s) to maintain and constantly add fresh, new email contacts to your list.
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, it’s time to regroup and find better places to put those resources.
Here’s 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. These customers are already interested, and interested customers are more likely to make purchases, especially with nurturing. For interested customers, you could start nurturing your relationship with HubSpot or alternative tools with email sequences.
Opting in necessitates website functionality that captures the user’s email address. You can achieve this with a form builder or other conversion tool (more on that later).
The other piece of the puzzle is creating demand. As mentioned above, you can do this by creating great blog content and making it easy for people to subscribe. In turn, blogging can help you:
- Increase your online presence
- Build up search authority
- Create evangelists from your content
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 increasing your list of sales-qualified leads, which brings me to my next point …
4. Use lead generation to get the answers you want.
Another problem most small businesses share is lead generation — specifically, generating enough leads to keep the sales team happy. Marketers also emphasize that this is a top priority.
Given this, generating leads that are both high quantity and high quality is an important objective. A successful lead generation engine turns website visitors into prospective customers and provides a steady stream of sales prospects while you sleep.
Here’s How to Fix It:
To make the lead generation process work for your business, you must first optimize your existing website for conversions. Your website is the most essential tool you have for turning prospects into customers. Look through your website and ask yourself:
- Do each of your web pages 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 most of their traffic:
- The Homepage
- The “About” page
- The “Contact Us” page
- Maybe one or two of your most popular blog posts (these blog posts will help you 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, so finding and implementing the most robust free marketing tools can be a game-changer.
5. Delight your customers, get loyalty in return.
Customer satisfaction is a great goal, but customer delight is even better. Here’s why:
- Positive service experiences entice customers to make additional purchases and repeat loyal customers spend more
- Satisfied customers engage in word-of-mouth marketing, helping you with free acquisition
- It’s cheaper to retain an existing, satisfied customer than it is to acquire a new one
Unfortunately, as a small business, it can be tough to delight customers in the way they desire. A lack of employees or dedicated service teams to help customers can also make it challenging to keep up and solve their issues. On top of that, a lack of capital can make it extra difficult to create programs that customers enjoy, like loyalty programs.
To achieve true customer delight and loyalty, you must surpass expectations and deliver an unmatched experience.
Here’s How to Fix It:
It takes work to continue solving for your customers in a way that turns them into raving fans. Here are some steps I recommend to 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
When you understand your customers’ needs, expectations, and cater to their desires, it will pay off, as you will reduce customer churn and instead inspire loyalty.
6. Hire the right talent.
The U.S. Chamber of Commerce’s recent research on SMBs shared that 45.9% of Americans are employed by a small business. However, 82% of them operate without any employees at all. This is a tough statistic to consider, especially since most of the challenges on this list can’t be overcome without a fantastic team that understands business goals and can work together to meet them.
In addition, a 2022 report from the Society for Human Resource Management (SHRM) shared that the cost of onboarding can average about $4,700 per new employee, which is troubling for those operating with smaller budgets. If you have high employee turnover, you’re spending more money hiring talent than you would like.
Here’s 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, it’s crucial 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. Here’s what I suggest you do to make talent acquisition a little easier:
1. Create your “dream” employee persona.
Just like you create buyer personas for your customers, create candidate personas for your job candidates. Your personas should differ for each role you’re hiring for but will share some underlying traits around company culture.
2. Don’t let the good candidates go.
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.
3. Don’t just brand your business; brand the experience of working there.
Employer branding also plays a significant and critical role in hiring and attracting top talent.
This helps potential candidates feel excited about the possibility of working for a brand with an established presence, and your current employees will feel proud of the work they’re doing and proud to represent your business.
Focusing on branding to help you attract top talent will pay off, as strong branding is associated with a minimal organizational turnover.
7. Managing Workflow
Once you have the people to make the magic happen, the next challenge is managing workflow. You want to ensure that your team has the processes and tools to do good work 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? This is why a common challenge for small businesses is effectively managing workflow, especially as your business scales. The good news is that, when done right, it does pay off: HubSpot’s 2024 State of Marketing Report confirms that three in four marketers using automation tools say it helps their business collaborate more effectively.
Here’s How to Fix It:
The best way to diagnose the roadblocks your team faces and increase efficiency is by creating ways for them to provide feedback. You can do this 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
Understanding how your employees feel and any roadblocks they may face will help you identify areas that would benefit from automation. As mentioned above, implementing time-saving strategies can be a significant benefit to improving performance and achieving overall business success.
8. Financial Planning
More resources increase ability, efficiency, and quality. Unfortunately, access to many of these resources comes through having capital, but small businesses reported that a lack of capital or cash flow was their number one challenge.
In addition, small business loan approval at big banks is still sparse. The Small Business Association’s (SBA) 2024 Capital Report revealed that only 1,100 loans and equity investments were given to small businesses and innovative startups. Given this current landscape, financial planning with limited resources and a tight budget can be complex for small businesses.
Here’s 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
This is a tricky one, especially since every situation is different. This problem arises in all business areas: product development, marketing and content creation, 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, which directly feeds into the small business challenge of finding and hiring top-quality talent.
In addition, you may land a large client that makes you feel hopeful for the future, but it then becomes difficult to keep up with their needs. Because of this, a small business challenge is being able to scale and managing the side effects that come with scaling.
Here’s How to Fix It:
Unfortunately, there’s no perfect answer here. But I will say this: What it comes down to is not obsessing over every detail but the right details. Closely monitoring product perfection, for example, might not be as important as doing so 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, product-focused, technology-focused, 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 daily, there are many others. With the proper planning and strategy, many of them can be planned for and mitigated.
Small Business Success Starts With Solutions
Running a small business is no easy feat. And while all the problems can feel daunting, they are far from insurmountable. By proactively identifying key obstacles and employing strategic solutions, small business owners (yes, even you) can significantly improve their chances of not only surviving but thriving.
My final words of advice? Don’t hesitate to seek advice, leverage technology, and continuously refine your approach to not only being a good business owner but a good leader and collaborator. With the right mindset and tools, you’ll overcome the statistics, build a strong foundation for your business, and set yourself on the path to long-term success.
After all, resilience and innovation are often the hallmarks of the most successful small businesses. So, what’s your next big move to turn challenges into opportunities?
Editor’s note: This post was originally published in July 2018 and has been updated for comprehensiveness.
