Starting your own business is not without its difficulties. But the risks and challenges are often worth the rewards that come with small business ownership — freedom to be your own boss, opening the door to new opportunities, and more.
To better understand some of the challenges with starting a business, BizFilings surveyed nearly 600 current and future small business owners across various industries
In this article, we look at their top five fears and challenges and offer some ways in which to address them.
1. Fear of failure
A fear of failure weighs heavy among new business owners, with 39% citing it as a chief concern. But far from being a bad thing, fear is a natural response to undertaking a new challenge. It’s what stimulates us to overcome obstacles and succeed. Fear is also a learning opportunity. By taking on something new you can apply lessons learned to your business and personal life. Try not to view fear as something to run from, embrace the emotion, and leverage it to spur you on.
2. Dealing with uncertainty
Starting a business is a big undertaking and, unsurprisingly, 31% of business owners are concerned about doing something wrong. This can often manifest as analysis paralysis or uncertainty and stop you from getting things done. To overcome this, gather as much information as you can before you make important decisions. Then assess the outcome of that decision and move forward.
For more complex decisions, such as cutting budgets or hiring employees, view your decision in the context of your wider business goals and how it may impact your plans. Consider all options on the table and be prepared to accept the consequences of your choices. If things don’t work out, be sure to have a back-up plan.
3. Getting the right advice
The BizFilings survey also reveals that small business owners have an overwhelming need for guidance and proper resources, especially when it comes to laws, regulations, and taxes — 25% of respondents worry about doing something wrong.
The internet is always a useful go-to for many business owners, but it can be overwhelming and you may not be able to completely rely on the information you find.
It’s good to start with trusted sources, such as the U.S. Small Business Administration (SBA). Some of the best resources on starting and running a business can be found on the SBA website, including guides, articles, webinars, and more.
Your state is also another valuable resource for small business information. Each state has one or more Small Business Development Centers (SBDCs) that can provide face-to-face consulting and training. Your city or county may also provide information and resources for small businesses.
Check out SCORE. Known as “Counselors to America’s Small Business,” this non-profit comprises a network of 13,000+ volunteer business counselors (many who have walked in your shoes) across the U.S. and its territories. These volunteers act as advisors and mentors. SCORE’s website also includes a range of useful startup resources.
Don’t overlook community resources, too. Look for networking opportunities, such as those offered by your local chamber of commerce. Engage a business coach or mentor. Professionals such as lawyers, accountants, tax professionals, and your bank representative can also advise on important business decisions.
4. Staying on top of laws and regulations
This is a key part of business ownership, yet 23% of survey respondents said they struggle with it. Maintaining compliance with federal and state laws can seem like a massive undertaking, especially if you’re a new business owner. Even established businesses can go awry since laws change constantly.
The first step to compliance is making sure that your business is established correctly. This means obtaining the right licenses and permits, choosing the right business entity type, and fulfilling your tax requirements. A CPA is a useful resource as is your city and state website, which you can refer to for changes. The SBA also offers a guide to help your business stay legally compliant.
Another option is to partner with a compliance specialist who can fulfill certain legal requirements for you, as well as providing you with compliance alerts and compliance management tools.
Remember, your legal responsibilities will depend on your business and location. And be aware that compliance requirements for small businesses are continually evolving.
5. Understanding the tax implications of choosing a business structure
Choosing the right business structure or entity is a big decision that can have tax implications for your business. When starting your business, and even as it grows, it’s important to understand the different tax requirements of each legal structure — sole proprietorship, LLC, corporation, and so on.
It’s always wise to understand the basics of small business taxes, even if you are your professional tax and accounting services. As your business scales, you can be one driving the conversation about potential changes to your federal tax income tax obligations and about whether you are taking advantage of all the deductions available to you.
View the BizFilings Small Business Survey 2020
Whether you’ve been in business for years or are just looking to open your doors, learn more from those who have walked in your shoes, and get best practices for addressing your pressing concerns. Download the Free Guide