Five Obstacles Small Business Owners are Facing in 2024

Brand Story – Strategies to help your business thrive in this rapidly changing business landscape.

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The world of business has changed rapidly over the past five years, leaving many small business owners with new obstacles to overcome. In this article, we examine five challenges facing modern day business owners, and discuss strategies to break down barriers to future success. While general information is offered in this article, a consultation with Dominguez Accounting will allow us to personally discuss your current strategic plans and offer guidance specific to your business

FUNDING

Entrepreneurs go into business with a vision; often without the funding to bring it into fruition. A well-developed Business Plan brings that vision to life; presenting the current financial statements and projections required to seek funding through outside investors, grants, and loans.

Strategic Planning is one of the most important aspects of starting and growing an independent business. In fact, The Bureau of Labor Statistics indicated that 20% of businesses close within their first year, most due to lack of planning.⁶ Developing a business plan, however, is not a one-time thing. A business plan is a continuously evolving document that allows business owners to navigate challenges that emerge throughout the life of the business.

One critical mistake made by many business owners is lack of attention to Cash Flow. No matter your industry, you must ensure that the revenue you are generating will cover the overall costs of doing business. A Cash Flow Analysis dives deeper to illustrate the timing of cash coming into the business, and cash going out; ensuring that you will have cash on hand to cover payroll, taxes, inventory, and other essential and time-sensitive financial obligations. 

Maintaining accurate accounting records and updating your strategic plan on a regular basis is the key to financial success. Many business owners find that outsourcing some of the more complex and cumbersome aspects of operating their business, such as bookkeeping, payroll, tax preparation and compliance obligations gives them confidence in presenting their business plan to potential investors.

Whether you are just starting out or navigating the next chapter of operating your business, a FREE consultation with Dominguez Accounting can help you identify strategies to solidify the financial position of your company for years to come. Financial planning, tax planning and consulting are among the many services we offer at Dominguez Accounting.  With comprehensive accounting packages and à la carte services, we can create a custom service package that fits your needs and your budget. Call our office at (503) 594-7624 and get the ball rolling today.

MARKETING

Brand Recognition is an important element of success in any product or service industry. Positioning your business as an established brand can be overwhelming for many entrepreneurs. It is important to identify emerging industry trends, barriers to market entry, and other anticipated obstacles, when developing a marketing strategy.

Emerging trends in brand recognition present challenges for established businesses and start-ups alike. When choosing a trusted brand, nostalgia plays a significantly smaller role today than it did in generations past. Rather than gravitating towards the products and service providers used by their parents and grandparents; younger consumers crave novelty and gravitate towards companies whose mission aligns with their personal values. Incorporating your marketing strategy into both your business plan and your budget is essential.

The U.S. Small Business Administration recommends that businesses allocate 5-10% of their total budget to marketing; and should anticipate investing more when starting or expanding a business.⁷ A common mistake is to make cuts to the marketing budget in reaction to a drop in sales. Unfortunately, this can lead to an additional decline, as well as diminished brand recognition; further compounding the impact on revenue.

A decline in sales may signal the time to shift additional funds into your marketing budget. Revisiting your business plan with a trusted business consultant helps you identify ways in which you might free up funds for high ROI marketing initiatives and targeted marketing campaigns. Dominguez Accounting can help you incorporate detailed contingency plans into your marketing strategy, preparing you to react to market changes quickly and efficiently. Your initial consultation is free! Call (503) 594-7624 or (503) 509-2093 en Español to schedule a free consultation.

NAVIGATING GROWTH

Growth is a key indicator of success, however, the complexities of scale that accompany expansion present their own barriers. Strategic planning is a necessary component of both facilitating and navigating growth, and there are many variables to be considered.

Navigating compliance and liability, especially when an expansion involves hiring employees across state lines, presents new challenges. Regulations have changed rapidly with recent federal and state-level legislation, making it difficult for business owners to stay up to date.

One modern challenge facing business owners is the complex nature of emerging regulations around remote employees. The trend towards remote employment has raised legal questions regarding state jurisdiction over out-of-state employers. Many factors are considered when determining jurisdiction, including the extent to which the business was established for the purpose of conducting business within the remote state; the extent to which the employer facilitated remote work by providing office equipment to the remote employee; the location in which the employment contract was executed; and the reason for remote employment⁴.

According to the American Bar Association, if jurisdiction is established in a remote state, the employer would be subject to the regulations imposed under the laws of that state, including those governing anti-discrimination, minimum wage, state employment tax withholding and payments; and benefits such as guaranteed paid/unpaid leave, unemployment benefits and more.⁴ Failure to comply can lead to civil and legal consequences. Regulations vary by state and could apply even if an employer inadvertently violates laws in a remote state.

Outsourcing payroll processing gives business owners an advantage when entering new markets. Outsourcing payroll mitigates risk by shifting liability from the employer to the payroll processing service provider. Additionally, offloading these tasks frees up additional time for the business owner and staff to focus on other aspects of the expansion, such as funding, marketing, and onboarding additional staff.

Schedule a FREE consultation with Dominguez Accounting to explore the benefits of outsourcing payroll processing and other support services to a qualified accounting professional. We will discuss your business plan and help you identify strategies to successfully grow your business.  Call our office at (503) 509-9817 to get started.

STAFFING

Maintaining the quality of the products and services you provide as you adjust operations and train additional staff is essential to success. Attracting and retaining qualified employees is the number one barrier facing entrepreneurs in this rapidly changing business landscape. In fact, 89% of employers actively hiring in January 2024 reported receiving few or zero qualified applicants, leaving those positions unfilled.⁶

One challenge to attracting qualified applicants is competition offering salaries, benefits and perks that are often not accessible to small business owners. Among U.S. workers actively seeking new employment, 44% cite compensation as the highest priority in applying for a position.⁶ 

Another aspect of staffing struggles is Employee Turnover; a labor expense many business owners overlook. The cost of turnover for hourly workers averages $1,500 per employee, with more technical positions averaging 100-150% of the annual salary.¹ According to the National Federation of Independent Businesses January 2024 Jobs Report, “The percent of small business owners reporting labor quality as their top small business operating problem remains elevated at 21 percent, up 1 point from December [2023]”³. Additionally, labor costs were cited as the most significant issue business owners face in operating their business.

Fortunately, there are strategies that small business owners can consider in addressing these barriers. At Dominguez Accounting, we offer a wide range of services to support your business staffing strategies including payroll processing services, compliance filings and strategic planning. Strategic planning can allow you to enhance your current compensation strategy in ways that will help you budget for expanding your workforce, attract qualified applicants, and easily navigate the complexities around employee onboarding, payroll, and compliance. Visit www.dominguezaccounting.com to learn more.

TIME/ENERGY

Many business owners are drawn to entrepreneurship because they want more control over their professional and personal lives. Work-life balance is more than just a buzzword; it is the ultimate goal for employers and employees alike. However, business owners often find themselves working more hours than ever before. In fact, according to a survey conducted by The Alternative Board, approximately 82% of small business owners work over 40 hours per week, with approximately 39% working 60+ hours⁵. Ultimately, the success of the business falls on the shoulders of the business owner, which is why it is important to develop strategies to avoid burnout.

Entrepreneurs often struggle with the temptation to do it all. Having built their business from the bottom up, most small business owners struggle with delegating and outsourcing tasks that could otherwise be handled by an in-house employee or outside contractor. This can lead to poor time management and reduced productivity on the part of the business owner, resulting in opportunity costs of otherwise allocating that time to other aspects of growing their business.

Deciding which tasks to delegate and which to outsource is often a sticking point for entrepreneurs. Administrative tasks can be easily handed over to an internal employee if sufficient staffing is available, whereas more technical tasks requiring specialized expertise are best outsourced to professionals in their field.

Though cost is one of the main factors business owners consider in deciding when and what to outsource, many find that outsourcing more complex and cumbersome tasks can cost less than hiring additional staff. Using contracted service providers in areas such as technical support, legal services, bookkeeping, payroll processing and tax preparation/filing are strategies that business owners can use to streamline processes, increase efficiency, boost productivity, ensure accuracy of financial records, and ultimately free up time for the business owner.

With your free consultation from Dominguez Accounting, we explore strategies for delegating and outsourcing the aspects of business that feel like a chore, so you can focus on what inspired you to go into business in the first place.

Call our office at (503) 594-7624 or (503) 509-2093 por Español. Or you can visit us online at www.dominguezaccounting.com. “Where your business is our priority.”

References:

1-Heinz, K. (2021, November 19). The True Costs of Employee Turnover. Builtin. Retrieved February 9, 2024, from https://www.americanbar.org/groups/labor_law/publications/labor_employment_law_news/fall-2021-issue/jurisdictional-questions-raised/

2-Lesonsky, R. (2019, July 9). How to Get the Most From Your Marketing Budget. Retrieved February 10, 2024, from https://www.sba.gov/blog/how-get-most-your-marketing-budget US Small Business Association

3-National Federation of Independent Business Research Foundation (2024, February 13). NFIB Small Business Jobs Report. NFIB. Retrieved February 13, 2024, from https://www.nfib.com/foundations/research-center/monthly-reports/jobs-report/

4- Sass, C. N., & Zumarraga, J. D. (2021, November 19). Jurisdictional Questions Raised When Remote Workers Reside in Other States and Countries. Retrieved February 10, 2024, from https://www.americanbar.org/groups/labor_law/publications/labor_employment_law_news/fall-2021-issue/jurisdictional-questions-raised/

5-Sutter, B. (2023, December 29). How Hard Small Business Owners Work. Retrieved February 10, 2024, from https://www.score.org/resource/blog-post/how-hard-small-business-owners-work

6-US Bureau of Labor Statistics (2024, February 4). Employment Situation Summary 2024. Retrieved February 14, 2024, from https://www.bls.gov/news.release/empsit.nr0.htm

7-US Small Business Association (2023, March 29). Frequently Asked Questions. US Small Business Association Office of Advocacy. Retrieved February 8, 2024, from https://advocacy.sba.gov/wp-content/uploads/2023/03/Frequently-Asked-Questions-About-Small-Business-March-2023-508c.pdf

Dominguez Accounting is a local, family-owned and operated accounting firm that offers a wide range of accounting and consulting services. We specialize in business and individual tax preparation, tax filing, and tax planning. Every tax form we file with the IRS is reviewed by Connie L. Dominguez, MBA Accounting, IRS Enrolled Agent, Licensed Tax Consultant and Owner of Dominguez Accounting.

Schedule your free consultation online at www.dominguezaccounting.com, or call (503) 509-9817 o para Español tele (503) 509-2093.

Thank you for choosing Dominguez Accounting: “Where your business is our priority.”

Brand stories are paid content articles that allow Oregon Business advertisers to share news about their organizations and engage with readers on business and public policy issues. The stories are produced in house by the Oregon Business marketing department. For more information, contact associate publisher Courtney Kutzman.