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How to Deal with the Current Challenges Facing Entrepreneurs

As most entrepreneurs know, business success is more than a great idea and hard work. One of the critical factors in building and maintaining a thriving business is your ability to confront challenges—some of which you have no control over—and navigate through them.

As the U.S. enters the third year of the coronavirus pandemic, all the inherent challenges of entrepreneurship have become even more complicated. Below is an overview of some of the most pressing issues for entrepreneurs and business owners right now. 

Recruiting

Recruiting diverse and qualified talent is difficult under the best of circumstances. However, the pandemic, a turbulent economy, and a low unemployment rate have made this task even more challenging. In October 2021, the unemployment rate in the U.S. was 4.6 percent and trending downward. 

Robust employment figures make recruiting more difficult, especially when you’re seeking highly qualified workers with very specific skills. But, on top of this, the so-called “Great Resignation”—fueled by the record number of workers quitting their jobs—has made recruiting even tougher. In November, there were more than 11 million open jobs in the U.S., and the current tight labor market will likely continue. 

Inflation

Inflation is at its highest point in the last 30 years, and there is no indication when or if the rate of increase in prices for consumer goods will return to pre-pandemic levels. You are probably already paying more for supplies and materials, labor, and shipping. 

To survive high inflation, you may need to rethink your pricing strategy. Some businesses can increase prices without losing customers, but others can’t. For those, it may be possible to diversify with new products that yield larger margins. Cutting expenses and boosting sales are two other obvious, yet effective strategies. In terms of boosting sales, always remember that it’s cheaper to retain a customer than find a new one. 

You may also have to consider financing. If your business generates a good income, you have more leverage when seeking new funding through lending or investors. Getting the money before you need it will have you better prepared to handle a drastic uptick in your supply or operating costs. Another hedging alternative is to reinvest your profits into the business.

Staff Turnover

Turnover is a serious drain on many businesses. Did you know that losing even a lower-level employee can set you back about $3,500? What’s more, the loss of a staff member costs you untold hours of productivity plus the time, money, and energy required to replace them. It’s imperative to focus on employee retention.  

With the current tight labor market and workers resigning at high rates, retaining employees is much harder than in the past. The U.S. Bureau of Labor Statistics reported that 4 million Americans resigned from their jobs in July 2021. This tsunami of employee exodus is a severe point of concern for employers, particularly in the tech, healthcare, and other industries needing highly skilled workers. 

To find out your business retention rate, use this formula: “Number of annual voluntary separations divided by the total number of employees equals turnover rate.” You can improve your employee retention rates by considering these aspects of the employee experience at your company

Tough, But Not Insurmountable

As the pandemic continues, entrepreneurs and business owners are facing major challenges on a daily basis. The proactive suggestions above can help you confront these big problems head-on and weather the storm.  

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