Top 6 Challenges for Small Businesses in 2020
Small business owners face a range of challenges every day but when it comes to planning for 2020, it’s all about balance. Balancing what you know, such as company data and industry trends, with advice from experts and entrepreneurs, to help you better prepare for next year.
And because small businesses work with tighter budgets and profit margins compared to bigger companies, you’re required to be more sensitive and watchful of factors that affect finances, such as a possible downturn in the economy.
Here’s a look at 6 top challenges that small businesses could face in 2020.
Any size company can be a victim of a cyberattack. While a big company may seem a more likely victim due to the sheer volume of data and financial gain, hackers are also targeting small businesses.
An attack can prove devastating to small businesses – the National Cyber Security Alliance says 60 percent of small and medium businesses that fall victim to security breaches go out of business within six months.
So, the challenge for you as a business owner in 2020 is to identify your cybersecurity needs and solution – to protect your business, your customers and vendors’ private data.
Attracting New Business
Attracting new business was cited as one of the top 2020 challenges by small business owners in a Wells Fargo/Gallup Small Business poll.
Small businesses expressed optimism for their businesses next year, with 56 percent agreeing that the economy is on the right track for business growth in the next 12 months, according to the Wells Fargo/Gallup’s Q4 2019 Small Business Index.
One indicator tempering this optimism is that a third of business owners (33 percent) said an economic downturn is either “very” or “extremely” likely in the next 12 months, though two-thirds said they are somewhat or very prepared for such an occurrence.
“For the third consecutive quarter, business owners highlighted attracting customers and new business as their top challenge, with 15 percent putting it at the top of the list,” said the index report.
“The Small Business Index is invaluable as one of the tools we use not only to measure current sentiment and priorities among business owners, but future ones,” said Elli Dai, head of Small Business and Personal Lending Group at Wells Fargo, in a company statement. “Both the continued optimism of business owners and their thoughts on key priorities and issues for the election and economy overall provide a window into how to best support their continued growth.”
Competition from online retailers and larger corporations was the second highest-rated challenge cited by small business owners in the Wells Fargo/Gallup poll.
“These results seem to indicate that the cautious optimism we have observed over the past few quarters is still present among owners,” said Mark Vitner, senior economist at Wells Fargo, in a press release about the index.
“As optimism continues to climb, indicators such as the levels of preparedness for a downturn and the challenges they are highlighting denote a more tempered outlook.”
The power of user reviews is a marketing trend that small businesses can’t afford to ignore in 2020.
Data continue to point to growing research that indicates consumers are more apt to make a purchase if they can see what other people are saying about the product, service or company.
“Ninety-two percent of people will hesitate to complete a purchase when there are absolutely no reviews available,” according to the digital marketing group Fan & Fuel.
This is particularly important advice if your business is selling products online. “When real people advocate your brand online, your business and product become more trustworthy and can lead to increased sales,” writes Rea Regan of Connecteam in a blog for the employee management software company.
Cash Flow Management
Managing cash flow continues to be among the biggest challenges for small business owners.
Sixty-nine percent of small business owners who participated in an Intuit QuickBooks study said cash flow concerns keep them up at night.
And probably for good reason – it’s one of the major factors that can take down a business. One U.S. Bank study reports that 82 percent of business failures are due to poor cash management.
“This is a constant, regardless of the year,” says Ken Wentworth, owner of Mr. Biz Solutions, in a blog by Paige Smith on Fundbox.
Even if you have a lot of assets, he says. “Without cash, you have no business.”