The small business industry is an important and crucial component of the American economy. This is maybe one of the many reasons why a number of entrepreneurs dream of starting their own business. Every year, there are hundreds and thousands of people starting their own small-scale business because of several reasons such as the opportunity to be their own boss and the potential of earning. With the small number of employees and relatively low volume of sales, small-scale businesses are in a very fortunate position since they have the capability to be quick and flexible in their procedures and practices. Unlike large companies, small businesses don’t have a problem dealing with many levels of administration.
However, with the erratic and uncertain condition of the American economy, the small scale industry should know better that things could go wrong. Although no one should operate their business thinking they are going to fail, there is nothing wrong with preparing oneself and his company for possible struggles in the small business sector.
Potential Challenges of the Small Business Sector
Since small businesses make up 99.7% of all American employer firms, they are considered very significant. However, not all of these businesses survive mainly because of the uncertain economy and the entrepreneur’s unpreparedness for possible challenges. Several recent indicators have again resurfaced signifying the small business’ sectors failing condition. These indicators will give rise to a number of possible challenges for small-scale businesses.
Weak Sales Leading to Poor Revenue
Poor sales are the number 1 problem. The new monthly Intuit (INTU) Small Business Revenue Index disclosed that small business sales only increase by 0.01% In April compared to the 0.4% increase documented last December. This decline in sale increase can lead to poor revenue in the near future for small-scale businesses.
Business Growth Uncertainty
The uncertainty for real business growth can be an effect of various existing business problems. The lack of market demand, the lack of finance, lack of skilled employees, lack of strong management, current market ambiguity, and lack of access to necessary technology.
Slow employment growth
One of the possible problems that a small-scale business will face is slow employment growth. It is an overwhelming ordeal for small businesses to attract employees. They have to compete with large companies when it comes to employee salary and benefits they can provide. Apart from the lower salaries and lesser benefits that discourages employees, the lack of opportunity to advance professionally. The lack of skilled employees will have a direct affect to the growth of businesses.
Difficulty in Financing Expansion
Since small businesses have scarcity of capital and weak credit worthiness, they have a big problem when it comes to obtaining funds for expansion.
These are only some of the possible problems that the small business sector needs to be prepared for. Making predictions for the future without even lifting a finger to do something to thwart the possible loss that these potential problems can do to a business will not give the small business sector a bright future ahead. Many business studies show that 7 out of 10 small-scale businesses can survive for at least 2 years, 5 will last for 5 years, 3 will carry on at least for 10 years, and only two will endure for 15 years or more. Are we contented with this future of the small-scale business industry?