Becoming a business owner is a significant accomplishment. Running a business comes with a lot of responsibilities. If you are the only owner, you probably wear many hats.
Business setbacks can happen without forewarning. We can look at COVID-19 as a prime example. No one knew a pandemic was going to shut down the world. Or that thousands of businesses would shutter their doors.
Even with assistance from the government in the form of PPP and EIDL loans backed by the Small Business Administration (SBA), businesses continue to struggle.
As a business owner, you should have a business continuity plan and a disaster recovery plan. The two are essential when trouble comes your way. Still, it may not include every setback your business can face.
Let’s take a look at business setbacks you can encounter. Then, keep reading to learn seven things you can experience as a business owner.
1.Natural Disaster Hits While Running a Business
A natural disaster causes setbacks in business, especially when you’re forced to close or temporarily relocate. Unfortunately, natural disasters are occurrences beyond our control. Hurricanes, blizzards, tornadoes, and flooding top the list.
A structure fire is another source that can cause a business setback.
All businesses need insurance to protect assets in the event of a loss. You also want to make sure the property owner has insurance on the location.
2.Going Through a Divorce
Worse than a natural disaster is having your marriage fall apart. Divorce for a business owner is different, especially in states with community property laws. Whether your spouse is a partner or has a financial stake in the business, you can still end up owing them half the value.
You will first have to determine if the business falls under marital assets or separate property. If the business was in operation before the marriage, it might not be considered a marital asset. However, if your spouse contributed to the business and it increased in value, they can have a valid claim.
To learn more, check out this attorney.
3.Your Location is Sold
Gentrification is sweeping the nation. If you own a business in an area undergoing urban renewal, you could face a nonrenewal of your lease. Unfortunately, when this happens, there is little recourse.
The owner could double or triple the amount you are currently paying for rent. The property could get sold in the middle of the leasing term, and the owner can then force you to relocate. Sometimes in as little as 30-days.
No one wants to experience this, but it can and does happen. Therefore, it’s critical to have a backup plan. Set aside an emergency plan. Begin to think about where else in the city you could relocate and maintain your client base.
4.The Business E-commerce Site Goes Down
E-commerce websites allow businesses in multiple industries to take their operations online. Giving customers the flexibility to purchase online will increase your bottom line.
Just as a brick-and-mortar operation can experience a setback that leads to a temporary closure, so can a website.
Your website can go down for several reasons. It is vital to choose the best host platform for your site. Issues such as limited bandwidth or security breaches can interrupt user experiences.
Other non-technical issues include having a website design that is not user-friendly or mobile-responsive. A confusing layout and poor product descriptions can also create business challenges.
5.You Can’t Find Reliable Staff
Hiring the right team members places a business on the right path to success. But what happens when a valued employee leaves, taking with them years of expertise. Losing a valued employee is a major setback for a small business.
Another drawback for business owners is not being able to attract the right people due to budgetary restraints. Finances are a common business issue. The inability to pay a competitive salary or offer a benefits package makes it difficult to get an employee with the experience you desire.
Even if someone accepts the position, they may leave when something better comes along.
6.Lack of Funding to Promote Growth
An important part of a business plan is how you’re going to market your business. The inability to reach your target audience is a short road to failure. Consumers are needed to support your business, so before opening your doors, consider doing a market analysis.
The market analysis will show you the following:
The Health of the Industry
When you decided to start a business, the product or service was in high demand. It is not three years later. A market analysis will tell you the current future forecast for that business model.
Target Audience
Understanding your target audience can help reduce business setbacks. A popular product on the west coast might not have the same demand on the east coast. In this case, starting an online business is more beneficial than in a location where demand is low.
Competitor Market
Setbacks in business are also attributed to opening a store in a market that’s already saturated. You want to know who your competitors are and in what parts of town, they are located.
Market Pricing
Have you researched the price point for your product? Selling above the market rate can drive consumers to the competition.
7.Limited Cash Flow
Not having enough money to operate your business correctly will lead to business issues. Lack of funds is the top reason many businesses fail within the first five years.
Before opening your doors, determine how much money you’ll need for the first two years. Also, determine how you will access cash if needed.
Prepare for Potential Setbacks
Like most things in life, running a business comes with pros and cons. No one wants to experience setbacks that significantly impact the business. Still, it is essential to consider things that can go wrong and have a prepared action plan.
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