The business world is changing constantly and with every change comes a new set of challenges for small business owners to tackle. Fortunately, overcoming these hurdles is simply a matter of thinking ahead and equipping your small business with the proper resources and assistance. In episode #100, Elizabeth Larkin and Gene Marks discuss the most difficult obstacles facing small business owners today.
1:29—Today’s Topic: What are the Biggest Challenges Facing Small Business Owners?
2:01—The most common mistake among small business owners is misunderstanding the role they play in their own business; they can become so preoccupied with the daily tasks that they lose sight of the larger picture.
3:12—Stepping away from your business enables you to look at it more objectively and think ahead about its future.
7:49—Many business owners also struggle with finding qualified employees.
9:07—Business owners who have difficulty navigating their cash flow need to seek assistance from professionals who can help them make proper investments.
15:12—Gene encourages businesses to be the best in their specific niche because there is an audience for every market.
Submit Your Question
Elizabeth: Welcome to the 100th episode of the Small Biz Ahead Podcast. Yay.
Elizabeth: I know, it’s crazy.
Gene: That is crazy. That really is.
Elizabeth: It’s nuts.
Gene: Think about that. We do one a week, right? Then, it’s been more than that.
Elizabeth: No. It’s been more than that.
Elizabeth: Some weeks, we used to do one a week. Now, we do two a week.
Gene: Yeah, yeah, yeah.
Elizabeth: It happened pretty quickly.
Gene: It’s been a good couple of years. Crazy.
Elizabeth: Last time when we celebrated our 50th episode, we had Kanye, Coldplay, Oprah. We had this crazy party.
Elizabeth: This time, we wanted to bring it more to like a …
Gene: Sort of grassroots. I mean we’ve got …
Elizabeth: We wanted to bring it to more of a grassroots level.
Gene: Yeah, yeah.
Elizabeth: Stripped down party.
Gene: Bill Gates will be stopping by, Warren Buffett.
Elizabeth: He’s going to have a lot of good advice for small business owners.
Gene: Sure. Just kidding.
Elizabeth: Alright. We’ll be right back with our question about the biggest challenges facing small business owners right now, after we hear from our sponsor.
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QUESTION: What Are The Biggest Challenges Facing Small Business Owners Right Now?
Elizabeth: Gene, today’s question is a really good one. This is something that we … We get this question all the time, so I decided to shorten it and make it just really direct.
Elizabeth: We’ve gotten it a lot. If you’re listening and you submitted a question like this, thank you for doing so. It was on a lot of people’s minds.
Elizabeth: What are the biggest challenges facing small business owners right now? It’s early 2018.
Elizabeth: It’s Q1 2018 when we’re recording this. I think, from what I see with small business owners, is basically misunderstanding their role within their business. What I mean by that is you start your business. You’re doing everything. Then, you start hiring more people or you’re hiring out to contractors, you’ve got vendors. You’re still really in the trenches focusing on the day-to-day, when you really need to take a step back and look at the big picture. I know that’s hard to think about. Every day, you’re in the weeds. Once in a while, we’ve talked about this a lot before, you do need to step back and start delegating some of that and start thinking about the big picture and moving your business forward. If you don’t do that, who is going to do that?
Gene: I agree, Elizabeth. I speak a lot. I go around the country and speak a few times a month, four or five times a month, to different industry groups and associations. These are business owners of established companies, small and medium size and even large companies. I like to share the same story that I meet so many people that are successful or that have been around for a while. They’ve navigated their businesses through good time and bad, the recessions, through boom times or whatever.
The people that I know that have survived, that have really been able to build a business and have it sustain for a while, they do exactly what you just said. They step back but, most importantly, they’re always thinking ahead. We’re here in the first quarter of 2018. I promise you that the smartest business owners that I know, they’re really not thinking about 2018 as much as you … I mean, sure. They’re keeping their eye on the ball. They want to make sure things are whatever. That’s the day-to-day kind of stuff. Those people, they are thinking right now about 2019 and 2020, even beyond that as well.
They are making decisions now based on the trends going on around the world, and around in their area, about where to invest their money, where to spend money, what directions they should be taking with their business. The reasons why they’re doing that, and why they’re successful, is because they understand that people rely on them for their livelihoods. I mean they have employees, they have customers, they have partners, they have vendors, they have suppliers, they have their community that are relying on them to make sure that their business is heading in the right direction, that they’re thinking ahead.
They’re stepping back and they’re not … If you’re too much buried in the weeds of your business, you’re not going to be able to see those things that are ahead. You’re not making decisions that will keep your business going. We should all strive for that.
Gene: Our goal is to make sure that we have built ourselves. People ask me, “Well I’m so busy. Where do I go? What do I do?” Again, I mentioned, I speak at all these industry conferences. My advice to you, if you’re listening, is make it a point once or twice a year to go away from your business for a few days. Pick an industry conference or a trade show, go to some of the educational events, listen to the keynote, walk around the conference floor. Have some time on your own away from your business. See what other people in your industry are doing, here’s maybe some advice from some thought leaders. It really will help you look ahead. I think that is what your job is if you’re going to be successful.
Elizabeth: That’s such a great point. I even do that in my own job working for a large corporation. When I go to a conference, I can step back from what I’m doing. But in order to do that, you really do need to be willing to delegate some things.
Elizabeth: To take some stuff off your plate.
Gene: Yeah, 100%. I mean we’ve talked about this in episodes past, 99 of them past. The importance of delegating work, and making sure that you understand that if you’re going to be doing stuff, who is going to be doing that for you? I’ll give you my own example.
This year, 2018, I decided this last quarter, I wanted to expand the marketing services that my company provides. We sell customer relationship management software. We have about 600 or so active clients. You know what? I kind of feel like we could be providing additional help with these systems, marketing help with them. We can take the data that are being used in these systems, and use it to help them expand their websites, their social media sites, even do things like email newsletters, things like that. Things that my clients don’t have the manpower to do, I think we can do that.
Gene: I’m not going to do that for them. My first thought was, okay. If I want to expand these services, I’m going to hire somebody that I’m going to bring in and mentor and grow over 2018 to get that person going. The last couple of months of the year, I’ve been searching. I have found somebody who I just interviewed. I’ve just hired her, she’s going to start in two weeks. I’m going to be spending a lot of time developing her over the next few months to getting that.
Elizabeth: That’s the key though. It takes a little time in the beginning, it takes a lot of time in the beginning.
Gene: It does. I mean I am prepared for the fact that she will be unprofitable for me for, at least, the next six months, actually the entire year for all I know.
Elizabeth: Is she a consultant or did you hire her as a full-time employee?
Gene: No. She’ll be an employee. She’ll be an employee. She’s a young woman, in her late 20s, who has a lot of marketing background, worked for another company. She will be working with me in developing these services with our clients.
Elizabeth: That’s great.
Gene: Yeah. It’s going to take some time, a little bit of investment. I guess the point is though is that my first thought was, okay. This is the direction I want my business to go. There’s another line of service I want to offer, another thing I want to do. The first thing that pops into my mind is, okay. Who is going to do this for me?
Gene: There’s no way I’m going to be doing that on my own.
Elizabeth: Okay. That’s the number one biggest … Maybe not the number one, but it’s our first one today of biggest challenges facing small business owners right now, Q1 2018. Gene, give me one.
Gene: Yeah. Really on the battlefield, boots on the ground, when I talk to all of these people that come to conferences and my clients and even myself, Elizabeth, it is … Everybody’s biggest issue is finding good people. That’s the number one issue is people, people, people in 2018. Where do you find them? How do you keep them motivated? How do you compensate them? Then, also, retaining your best people as well, and making sure that you’ve good workplace policies and you’ve got good compensation plans in place and benefits and all that kind of stuff.
This is not an answer we’re going to discuss on this episode, because this is like 10 episodes of discussions when you break it all down. If you’re like, “Oh my God. I have an issue of getting good people for my company, or even finding people,” you’re not alone. I speak to, again, many manufacturing groups, just one in particular I just spoke to in Baltimore a couple of weeks ago, they raised their hands. There were like 80 people in the room, and we asked them, “How many people are under … They’re working with not enough manpower.” 79 people raised their hands. They can’t find enough people to do the work. When we talk about big issues for business owners, it’s a people issue in 2018.
Elizabeth: Okay. Number three.
Gene: Number three is navigating cashflow. What I mean by navigating cashflow in 2018 is this. If we were having this conversation a number of years back, we’d be talking about government regulations, too high taxes, all that kind of stuff. The reality is small businesses are doing pretty good. Optimism is certainly very strong, bank lending is pretty good right now. I’ve just reported on this in the Washington Post, how banks are, especially large banks, are lending money at a higher pace than before. I’m not saying it’s …
Elizabeth: Really? Large banks are lending to small businesses.
Gene: Large banks to small businesses at their highest pace in a long, long time.
Elizabeth: At a good rate.
Gene: At a good rate, yeah. At a competitive rate. Now, don’t get me wrong. The businesses themselves have got to still meet certain financial, so they’re not giving money away. The Small Business Administration has been active in backing loans. They’ve been a help in this as well. It’s strong economy, it really is. I do predict that it will get stronger. I think navigating that growth is a big issue for 2018.
Elizabeth: Specifically what part?
Gene: Managing your cash flow, managing your resources, deciding on where you’re going to invest your money. Also, not getting too fat and happy. This happens to so many people. You think that it’s going to be like this forever. We have to balance reinvesting in our business and growing our business with also not giving into the urge to spend all of our money, because we think it’s always going to be this way. We have to be saving, and even pulling money out of our businesses as well and putting that away into other accounts.
Elizabeth: How do you know when to do that?
Gene: There’s different rules and rules of thumb. Again, that’s another conversation as far as cashflow, how much cash should we have on hand? How much cash is too much cash or not enough cash in your business? There’s trigger points in 2018 that you have to look for. For example, you shouldn’t have more than six months of cash sitting in your business. If you’re doing good and you’re building up a little cash, that’s great.
Really too much cash is not a good thing. It drives down the value of your business, and it should be pulled out. While tax rates now are going to be lower in 2018, a lot of business owners are going to have some big decisions as to their organizational structure and how to maximize the ability to … These are great problems to have, don’t get me wrong, right?
Elizabeth: Yeah, sounds like it.
Gene: It’s a 2018 issue is how do we smartly navigate our cash this year? What’s the advice? What’s the takeaway? As a business owner, we can’t do this all ourselves. We need help. If you’ve got a few extra bucks, this is the year that you really should be hiring or working with a good CPA, a good financial advisor, a good financial consultant. Somebody who should be working with you now, because you’re busy. Hopefully you’re busy, and you’re selling and that’s all great. You need somebody that can help you take a step back and look at the money, where it is and where it’s going, and make sure that you’re investing it and saving it wisely. It ain’t going to last forever.
Elizabeth: When you were talking, I was thinking, I could never be a small business owner. I would have no idea how to manage cash flow.
Gene: It’s funny that you say that too. I just had this conversation with my son, who just graduated college and he’s working at a company now. Right now, he’s got some decisions to make about 401k plans and what is he … He’s a pretty smart kid, but he’s clueless when it comes to this stuff, his health insurance or whatever. My wife and I were explaining well you should do this, you have these kinds of choices, whatever. You could tell he was overwhelmed.
Gene: He’s like, “How does somebody learn all this stuff?” Now, we’ve been doing this now, I mean I’m in my 50s, so it’s over time, you learn it. You’re right. As a business owner, say you’re running an established business with 10 employees or 50 employees, there’s a lot to know about managing your cash.
Elizabeth: As you said, you can hire people to help you do that.
Gene: You do. Now, in the end, it’s your cash, okay? You never delegate and then wipe your hands clean and like, “Oh, I get my accountant’s handling all of that.” I hate it when I hear people say that.
Gene: Your accountant, trust me …
Elizabeth: He doesn’t care or she doesn’t care as much as you.
Gene: Yeah. No one is going to care as much as you do. That’s exactly right. No diss on accountants but, in the end, it’s your cash. You do have to keep an eye on it, but yeah. This is the reason why people bring on advisors and consultants and accountants, attorneys, because it’s really, really important stuff.
Elizabeth: You just want to hear what your options are.
Elizabeth: I can imagine being a small business owner and thinking, I don’t really know what to do here. I just want to be able to call someone and talk it through, get my options.
Gene: That’s correct.
Elizabeth: Then, you make the end decision.
Gene: That is correct. Think about it. There’s so many different … Like, “Should I get financing now? Interest rates, they’re heading up. If I have excess cash, should I pull it out of my business? Should I keep it in? If I do keep it in or pull it out, do I put it in the stock market, which has been crazy, or do I stick it under my mattress? Is now a good time to get more insurance? Are there tax deferred plans I could put money away to save for retirement or for my kids …” There’s a lot of stuff to know.
Elizabeth: There’s a lot to know.
Gene: This is a year, 2018, of … I’m not saying we’re all rolling in money. Don’t get that impression. It’s certainly better than it was a few years ago. If you’re making a few bucks, you’ve worked so hard at it, don’t make the mistake of just staring at it. You’ve got to be proactive with your money to make sure you’re getting good return and that it’s safe.
Elizabeth: Okay, we’ll be back after we hear from our sponsor with Gene’s Word of Brilliance.
WORD OF BRILLIANCE: Video
Elizabeth: Okay. Now that we’ve set you up for success in 2018 and beyond, Gene is going to give us his Word of Brilliance.
Gene: Yeah. I do have a Word of Brilliance. I think it actually does dovetail into this. The Word of Brilliance, it’s video. Okay? Now, not what you think. Do you know the show America’s Funniest Home Videos?
Elizabeth: Yeah. I think everyone knows that show, Gene.
Gene: Do you ever watch that show?
Elizabeth: I’ve never watched it.
Gene: That’s it. That’s my point. You’ve never really watched it, right? Do you know it’s on every Sunday night?
Elizabeth: I’m not exactly the target audience.
Gene: I wouldn’t be so sure. It’s on every Sunday night at seven o’clock on ABC.
Gene: It has been on for 28 years. Every week, five …
Elizabeth: Longer than I have been alive.
Gene: Five and a half million people tune into this show. I never watch the show. I used to watch it back in the ’90s, but whatever. I’d be flipping by the show and be like, “What is America’s Home … Have these people never heard of YouTube or Instagram or who is watching America’s Funniest Home Videos?”
Elizabeth: You were saying this back in the ’90s?
Gene: No. I was saying this right now. It’s on a Sunday night …
Elizabeth: You’re really …
Gene: Then, I’m like, “Look at them.” The show is still on, whatever. Five and a half million people. In fact, it is the number one rated show in its time slot during the summer time, I guess when obviously other competing program … 60 Minutes is in repeats then. It’s watched by a lot of people. You think to yourself, what is going … There’s a lesson to be learned from videos, from America’s Funniest Home Videos and it’s this. Whatever you do, there is an audience for everything. Now, America’s Home Videos doesn’t have the audience that it had back in the ’90s before the internet. Now, right, five and a half million is nothing to sneeze at.
Gene: It’s a profitable show, and it does quite well. It’s a big country that we live in, 330 million people. There are billions of people in this world. Whatever you do for an occupation, there is an audience for what you do, as long as you do it well. I watched an episode of America’s Funniest Home Videos last week, and you know what? It was pretty good, it’s funny. It’s stupid, it’s silly. The audience was …
Elizabeth: Was it about accountants?
Gene: No, no, no. The audience is voting.
Elizabeth: That would be hilarious.
Gene: They’re voting on their favorite video. The grand prize, it’s $10,000 prize they can win and then …
Elizabeth: I think that’s the hook though. It’s the voting. It’s the like, “Who is going to win?”
Gene: I know why people submit the videos. That’s certainly a hook to them, but watching it. No, it’s fun. The host is funny and it’s wholesome and it’s family. It’s great, it’s great. It’s a good product, and it’s aimed at a certain audience. That audience is the family audience of wholesome videos on a Sunday evening. That’s what it is. The takeaway is that whatever your business does, if you’re really good at what you do, there will always be an audience.
Nowadays, finding that audience is not as hard as it was even 20 years ago with the internet and marketing. If you’re a fantastic blacksmith, if you’re, say, a blacksmith, okay. Certainly blacksmith jobs are not as popular as they were, say, 200 years ago when everybody was riding around on horses. You know what? There’s plenty of horses around still, there really are. There are blacksmiths that are around, and there are people doing this. There are iron-based companies that are making their living doing this.
If you focus on Etruscan jewelry and that is your thing, trust me, there is an audience around the world that also has the same kind of likes. If you have certain specialties … Listen. I read the newspaper still. I realize that it’s a dying breed but, like a lot of people, newspapers are still published, millions of copies a day, because there is still an audience of people that read the newspaper.
Elizabeth: What are you saying here? There’s an audience for your business, you just have to go find those people.
Gene: That’s right. More importantly, more importantly, it doesn’t matter what you do as long as you’re really good at it, you can find an audience for it. I use America’s Funniest Home Videos as an example of that.
Elizabeth: You think people should do that through social media or through …
Gene: It depends on what your business is. My point is though is that if you … You always hear about people like, “Follow your heart, follow your gut, do what you’re passionate about.” Yeah, I really do believe in that. I also do believe that you can profit from that as well, if you’re very good at it. There’s always an audience.
Elizabeth: If you’re interested in something, it’s pretty much guaranteed there’s some other weird person also.
Gene: That’s exactly right. That’s exactly my point.
Elizabeth: I mean people still … What do you call the people? Taxidermists. They’re still in business.
Gene: Sure. There’s plenty of … Why would there be? Because there is a niche of people in this world that would like … There is a niche of people in this world, and I can’t understand this, are buying vinyl records. Can you believe that? It sounds so much better on digital. For some reason, these millennials are buying vinyl records. All right, fair enough. There’s an audience for that as well. There is people … big health food boom and vegetarian restaurants and all that, meanwhile there’s millions of people eating Big Macs every day. It’s a big world, it’s a big country.
Elizabeth: When was the last time you had a Big Mac? I’m going to guess it wasn’t that long ago.
Gene: I have Big Macs maybe three times a year.
Elizabeth: Oh really? Okay.
Gene: I last had a Big Mac in Chicago in December.
Elizabeth: Okay, so it wasn’t that long ago.
Gene: It was not, and it was amazing. Amazing. It is like the most …
Elizabeth: If you’re a new listener, I just want to give you some background, Gene loves junk food.
Gene: Oh I do, but I moderate it though. I moderate it, three times a year for my Big Macs.
Elizabeth: Yeah. I want to expand on your point, because you know I love Instagram.
Elizabeth: I just started following this guy on Instagram. His entire account is he just shows his lunch every day.
Elizabeth: It’s the same food every single day. It’s either a piece of salmon or a piece of chicken with white or brown rice, some vegetables and a little thing of fruit.
Elizabeth: I mean he’s a good photographer, so he makes it look appealing. It’s the same thing.
Gene: How many followers does he have?
Elizabeth: He has 70,000 followers.
Gene: 70,000. If he keeps at it and adds a little bit more, he can sell ads on Instagram.
Gene: Right? He’s an influencer of lunch to have.
Elizabeth: If you are a fan of having chicken or salmon with white or brown rice and vegetables, I will link to this guy in the show notes. It’s so funny.
Gene: That’s great.
Elizabeth: It cracks me up every day. He even says the same thing every day about his lunch.
Gene: There’s an audience for everything.
Elizabeth: Yeah. It’s so crazy.
Gene: That’s right.
Elizabeth: Alright. Join us next time. We’re going to be talking about our favorite books for starting a small business.
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