What Are the Biggest Threats to Small Business?

Small businesses are an essential part of the fabric of our society, and their success is critical to the success of our economy and our communities. I'd like to suggest that small businesses represent the heart of America's free markets. Small businesses are where people put their entrepreneurial dreams into action. 

Here are some of the benefits of small businesses:

1. Job creation: Small businesses are significant contributors to job creation. They create job opportunities for the local community, providing employment for people of different skill levels and backgrounds. According to the Small Business Administration (SBA), small businesses created 1.5 million jobs in 2019 alone.
2. Economic growth: Small businesses are vital to the growth of the economy. They contribute to the GDP and promote economic growth by generating income and creating wealth. They also stimulate competition, which helps drive innovation and reduce prices.
3. Local community development: Small businesses play a crucial role in the development of local communities. They help to build and sustain vibrant neighborhoods by providing goods and services that meet the needs of the local population. You can see this happening in Duluth's Lincoln Park District. Small businesses also tend to reinvest profits back into the community, which helps to support other local businesses.
4. Entrepreneurship: Small businesses are a platform for entrepreneurship. They provide opportunities for individuals to start and grow their businesses, pursue their passions, and achieve their dreams. Small businesses also help to create a diverse and dynamic business environment, which encourages innovation and creativity.
5. Resilience: Small businesses are generally more agile and adaptable than large corporations, which makes them more resilient in times of economic uncertainty like today. They can respond more quickly to changes in market conditions and customer needs, which enables them to stay competitive and survive challenging times.

On the other hand, small businesses also face a unique set of challenges and risks that can pose significant threats to their success. Some of the biggest threats to small businesses include:

1. Limited resources: Small businesses typically have limited financial and human resources, which can make it difficult to compete with larger players in the market. 
2. Economic downturns: Small businesses are particularly vulnerable to economic downturns as they may not have the financial reserves to weather a prolonged period of low sales and revenue. 
3. Increased competition: Small businesses may face competition from larger, established businesses or new entrants in the market, which can put pressure on their profitability.
4. Difficulty accessing financing: Small businesses may struggle to secure financing due to their size, lack of collateral, or limited credit history, which can limit their ability to invest in growth or ride out tough times. The current economic turbulence is especially problematic for companies dealing with debt. Uncertainty about interest rates makes it difficult to accurately plan ahead.
5. Cybersecurity threats: Small businesses are often seen as easy targets by cybercriminals, who may exploit vulnerabilities in their systems and steal sensitive data or money. This and most of the other challenges are directly related to not having the necessary funding to stay current. 
6. Regulatory compliance: Small businesses may struggle to keep up with changing regulations and compliance requirements, which can result in costly fines and legal issues. You may not be able to afford having an HR pro on staff, but there are HR pros out there whom you can lean on for this nightmarish facet of your business. Locally, Stacy Johnson of Audacity HR is a capable "go to" for this and other matters.
7. Staffing challenges: Small businesses may have difficulty attracting and retaining employee talent, which can impact their ability to grow and compete. 
8. Cash flow issues: Small businesses may face cash flow issues due to late payments from customers, inventory management, or other unexpected expenses.

These are just a few examples of threats to small businesses. One more to consider: life insurance. If your business is a partnership, what happens if one of the partners dies unexpectedly. How much will it set you back? Don't assume everything will be hunky dory because you're all young. 

On a related note, if the past three years has taught us anything it's that we can't take tomorrow for granted. Remember, it's not what happens to you, but how you react that counts.

To overcome these challenges, small business owners must develop sound strategies, stay agile and adaptable, and seek out support and resources as needed. If you're a business owner, I hope you've found something useful here.

EdNote: Story created with assistance from ChatGPT.

Illustrations by the author.