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Putting too much reliance on a single customer

You are more of an independent contractor than a business owner if a single customer accounts for more than half of your revenue. Diversifying your customer base is essential for company growth, but it may be tough, particularly when the client in issue pays well and on schedule. For many small companies, having a client who is prepared to pay on time for a product or service is a blessing.

Unfortunately, this might be a long-term disadvantage because, even if you have workers and so on, you may still be functioning as a subcontractor for a larger company. This arrangement helps the client to avoid the risks associated with expanding payroll in an area where activity may dry up at any time, and all of that risk is passed from the larger firm to you and your staff. If your major client has a regular demand for your product or service, this arrangement may work.

if your main client has a consistent need for your product or service.

Management of finances

Having enough income to meet expenses is essential for every business, but it is also essential for every individual. Whether it's your business or your life, one will almost certainly emerge as a capital drain, putting pressure on the other. To prevent this issue, small business owners must either be adequately funded or earn extra revenue to supplement financial reserves when they are needed. This is why many small businesses begin with the founders working a job while still creating a business. While this split attention might make it difficult to establish a business, running out of funds makes it impossible to grow a firm.

When cash is pouring into the firm, money management becomes even more crucial. Although most business owners can handle their own accounting and taxes, seeking expert assistance is typically a smart idea. The complexity of a company's books grows with each customer and employee, so obtaining help with bookkeeping helps minimize it from becoming a barrier to growth.

Mental & physical fatigue

Even the most zealous individuals are exhausted by the long hours, hard effort, and continual pressure to succeed. Many business owners, even the most successful ones, are forced to work significantly longer hours than their workers. Furthermore, they are concerned that their business would suffer if they are not there, so they resist taking any time away from work to recharge.

Fatigue can cause impulsive business judgments, even the impulse to leave it entirely. Finding a tempo that keeps the business humming while not wearing out the owner is an issue that arises early (and frequently) in the life of a small firm.

It is often preferable for a company to have a diverse customer base to pick up the slack when a single client stops paying.

Founder is always on call

Is your business still profitable the next day if you are hit by a car? A company that cannot function without its founder is a company with a deadline. Many businesses suffer from founder reliance, which is typically caused by the founder's inability to relinquish key choices and duties as the organization expands.

In principle, solving this difficulty is simple—a business owner just has to delegate more authority to staff or partners. However, in fact, this is a big stumbling hurdle for founders since it generally entails sacrificing (at least initially) on the quality of work being done until the individual performing the task learns the ropes.

Quality should never be sacrificed for the sake of growth. A small business requires both.

Mental & physical fatigue

Is your business still profitable the next day if you are hit by a car? A company that cannot function without its founder is a company with a deadline. Many businesses suffer from founder reliance, which is typically caused by the founder's inability to relinquish key choices and duties as the organization expands.

In principle, solving this difficulty is simple—a business owner just has to delegate more authority to staff or partners. However, in fact, this is a big stumbling hurdle for founders since it generally entails sacrificing (at least initially) on the quality of work being done until the individual performing the task learns the ropes.

Quality should never be sacrificed for the sake of growth. A small business requires both.

Quality and growth must be balanced.

Even if a company is not founder-dependent, there comes a point when the costs of expansion appear to equal or even outweigh the advantages. Whether it is a service or a product, a company must make sacrifices in order to grow. This might imply not being able to manage every customer contact directly or not examining every widget.

Unfortunately, it is generally that degree of personal involvement and attention to detail that propels a company to success. As a result, many small company owners find themselves shackled to these practices, to the cost of their growth. There is a wide range of quality between substandard work and an excessive fixation with quality; it is up to the business owner to steer its operations toward a compromise that allows for development while minimizing risk without hurting the brand.

In conclusion

Small companies have significant hurdles, and one of the biggest mistakes a would-be entrepreneur can make is to start a firm without contemplating the challenges ahead. We've looked into methods to make these issues more accessible, but they're unavoidable.

On the other side, a competitive drive is frequently one of the motivations for people to establish their own businesses, and each difficulty provides another opportunity to compete.

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