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Opinion: Overcoming first-year financial hurdles for business owners

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Small businesses are the backbone of America. In fact, 99.9% of businesses nationwide are made up of small businesses.

That’s more than 33 million small businesses, according to the U.S. Small Business Administration.

You are probably familiar with the fact 20% of small business fail in the first year, according to the U.S. Bureau of Labor Statistics.

The challenges can be numerous, including raising capital, maintaining a low expense ratio, being cost-efficient and customer acquisition. In the first year in business, it can be hard to know where to wisely spend your dollars and cents on marketing and when to grow into a brick-and-mortar location.

Successful business owners include Better Business Bureau Torch Award Ethics winner Michael Rodhouse of 417 Rekey. He remembers his challenges getting started 11 years ago well:

“Our biggest challenge the first year was getting our name out there. While there weren’t many companies in our field, the ones that did exist were well-established.”

Finding and sticking to a realistic operating budget is essential. Christina Ford took a leap of faith 22 months ago when she opened a revolutionary drop-in day care for kids called Kids Inn Child Care Center.

She jokingly would tell a younger version of herself: “There might not be any money left over to pay yourself!”

Mental toughness is key. It takes inner strength to adapt to going from a comfortable, consistent wage mentality to being a business owner where the first year in business you may not be sure where the next paycheck is coming from. New business owners can find budgeting that first year to be a huge hurdle.

“Adapting as a business owner is a tool you must have in the toolbox. It has allowed me to shift more easily to the business demands and make necessary changes,” continues Ford.

 Rodhouse agrees.

“If you don’t adapt, you’re sunk. Visionary business owners can intuitively recognize trends and seasons, enabling them to shift gears and adapt. Indicators of change can be subtle,” he warns. “If you don’t adapt accordingly and recognize the signs, it emits an embittered stench that repels your clients.”

What are three possible signs your business could be a bad stench to your customers?

  1. Charging unreasonable fees.
  2. Confusing pricing model.
  3. Lack of clarity for when bills are due.

BBB advises customers to solicit three bids from different contractors before accepting an offer. If your customers notice a significant price differentiation without any additional value, you can expect to lose the opportunity to serve. After a recent hailstorm, my husband and I solicited bids from different contractors. The insurance adjuster pointed out one of the contractors was charging to bring and remove his own ladders, which was supposed to be built into the pricing model and not an add on.

 Maintaining your cash flow and budgeting for dry seasons is necessary. Amanda and David Heideman own Acres of Envy and Fight the Bite. They worked in a family business before owning their own and credit the lessons they learned there to helping them achieve greater success. They’ve been in business for about three years and share these words of wisdom: “Business can be a roller coaster. There will always be things that will come up and make you feel like you’re moving backwards again,” says Amanda Heideman. “Our biggest challenge was figuring out how to grow at a rate that worked for us. We want to provide as many services for the customer as possible to be their one-stop shop, but at the same time, you don’t want to lose customer service or have employees spread too thin.”

Another locally owned business by a husband-and-wife team is Handy Helper. Based in Ozark, owners Tim and Stacey Bartholomew are working hard to stay on top of ongoing changes in the construction and remodeling industry. They specialize in helping aging clients.

“Our clients’ homes are their safe spaces and private sanctuaries, and often the biggest investment they will make in their lifetime. It is crucial that clients can trust us completely with that important possession,” says Stacey Bartholomew.

Regardless of the industry, all business owners I interviewed in this story agree that clients’ trust is essential.

“We are caring for the most important thing in the world to our parents,” said Ford of her day care center. “That begins with trust. Parents are trusting us to care for their children, and we don’t take that lightly.”

Stephanie Staggs is the owner of Staggs Financial Services LLC and previously was the Springfield region executive for the Better Business Bureau. She can be reached at stephanie_staggs@glic.com.

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