Whether you're new to the world of running a startup or you're a seasoned professional, it's easy to feel like you're constantly waiting for the "other shoe to drop." To a certain extent, that's because it's true -- the road to startup success is a fragile one, and there are just as many things that can go wrong as there are that can go right.
Recently, we interviewed a few financial professionals who work with many entrepreneurs and startup founders on a regular basis. We asked them a simple question:
"What are the biggest obstacles that a startup founder can face that make it difficult to find lasting success?"
Their responses are filled with invaluable information that you can take with you on your own journey, starting right now.
Many experts agreed that a big challenge most startup founders face isn't necessarily external-facing. It has less to do with sudden market fluctuations or Murphy's Law and is instead more about the founder themselves.
"The biggest obstacles startup owners face is themselves," said Joshua Standley, EA, ABA of DKK Accounting. "Many small business owners try to save money by doing everything themselves. This leads to working twice as hard to compensate for the perceived 'savings' of not hiring a professional."
Standley indicated that this often creates a ripple effect in the worst possible way. He continued, "Tasks end up piling up and not getting done in time, others get pushed to the side to do later -- and later seems to never come." Standley said that the best advice he can give to any entrepreneur is simple: "Get out of your own way. Look for a professional who understands your industry to take care of the tasks you don't understand and don't have the time to learn how to do."
Elliot Kravitz, ATP of EMC Financial Management Resources, LLC had a similar observation: "Sometimes the biggest obstacle facing startups is unrealistic expectations. This usually leads to quitting too soon because those expectations weren't met."
Kravitz said that becoming a successful entrepreneur isn't a sprint -- it's a marathon. People need to be aware of that going into the process if they're going to see their way through to the other side. "Oftentimes, people see a business that has taken 10 years or more to build and then the startup founder expects to be in the same place in a year. It's more likely that persistence pays off, so having a realistic expectation and being in it for the long run is how you need to approach things."
Standley Tilerin of TRC Plantation, Inc. said something similar, indicating that the biggest obstacle he often sees is "quitting too early." Michael Fischer, CPA, CITP said that his most commonly observed obstacles were "the cost of regulation and a lack of understanding of key performance indicators."
Tiffany Whitfield of Enterprize Income Tax and Financial Services said, "One of the biggest obstacles that startups face is gaining and maintaining clients. Coupled with finding reliable staff with the knowledge to accomplish company goals, these are usually two struggles that people have to learn to deal with almost immediately."
Bradley Smith of Bradley Smith Inc. had some larger, over-arching advice, on the other hand. He said, "The biggest challenge I see facing startups is a lack of adequate personal cash reserves." Indeed, studies have shown that cash flow problems are one of the major reasons why small businesses often fail, so it's clear that he's onto something.
"Many new business owners fail to plan for personal family expenses during the first year of business," Smith said. "This is critical as often the business in the early stages will require reinvestment of earnings for some time."
Along the same lines, Smith said, "The second biggest challenge I see some small businesses face comes down to not planning for personal income taxes and self-employment taxes by making estimated tax payments. It is so easy to get behind on these payments and very difficult to catch up."
He added, "Estimated tax payments are one of the first things I discuss with new business owners operating as sole proprietors or partnerships."
Yes, it's true that the challenges faced by an entrepreneur will come fast and furious -- particularly in those early days of the business. But at the same time, this is OK. "What doesn't kill you, makes you stronger" is a true phrase, and the philosopher who coined it was talking about running a small business whether he knew it or not.
So long as we understand where adversity comes from, we can take meaningful steps to mitigate it -- and that may be the most important piece of advice of all.
About Lee Reams II
I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.
