We have come a long way since the most recent recession which started in 2007 and ended in 2009. Economic experts believe 2018 was a strong year for the US economy, and 2019 will continue the trend of preventing a recession from happening. As the economy gets healthier, more businesses will open.

According to the US Census Bureau, there are more than 30 million small businesses operating in the country, compared to the 20,000 large business entities. Small businesses are the overwhelming majority. They also employ around 58.9 million people; that is almost half or 47.5 percent of the country’s current workforce.

As the main engine for the country’s economy, small businesses are deemed important but that does not save them from going through some tough challenges in the competitive world of business. It is a fact that 80% of new businesses close down within their first five years of operation, so knowing the aspects that make a business fail is important.

Here are some typical struggles business owners face.

Cash Flow Imbalance

Cash flow is the amount of money that moves in and out of a business at a certain period of time. It is a good indicator of how successful and profitable a business is. The problem with cash flow lies in the insufficient and unsustainable funds of capital. Around 67% of business owners agree that lack of capital is one of the major struggles that they encounter. The lack of money to continuously operate a business will eventually lead to its demise.

A healthy cash flow can be determined when the amount of money going in is higher than the amount of cash disbursed for different purposes. Increasing profitability will enable a business to have a positive cash flow. Cost-cutting can also help lessen the amount of money going out of the business.

Not Creating a Realistic Plan

Starting a business means the direction of money will only be going out for a while. You need to buy or rent items essential for operation and hire and pay people to keep the business running. This is normal, but it should not be permanent. After some time, you need to be profitable in order to stay in business.

Having an executable, effective business plan will help you set your direction and business goals. Failing to prepare a plan is like preparing to fail your business. Make sure your business plan, including research and marketing efforts, are strongly detailed.

Be sure to include these into your plan:

• Executive Summary
• Market Analysis
• Sales Strategies
• Funding Plans
• Financial Forecast
• Business Negligence

Financial struggles relating to legal matters and disputes can result from a lack of prevention and preparation. Around 40% of small businesses are not covered by insurance and about 75% are not fully insured. When unexpected and unfortunate things happen, it can quickly turn your business dreams into a nightmare. Contract disputes, employee or customer injuries, and even natural disasters can leave your business in ruins.

Be prepared for these situations by speaking with an insurance agent to be sure that you are covered adequately for anything that could happen.

Hiring Talent

According to a survey published in 2018, around 22% of small businesses struggle with recruitment and retention. Without the support and presence of dependable employees, a business owner will struggle with day-to-day operations. There are several reasons why employees leave their jobs, but it mostly boils down to salary and benefit packages.

During your planning, you should note what is the industry standard pay and figure a bit higher than that. That extra may be used to retain an all-star employee that may have otherwise left for better pay.