If you’re planning to start or grow a small business, you’re joining a dynamic sector that fuels the American economy. But while the rewards of entrepreneurship are many, so too are the challenges—especially in today’s economic climate.
Erie Ohio Capital sees firsthand the barriers entrepreneurs must navigate. Knowing these challenges in advance—and understanding how financial partners like us can help—is critical to building a sustainable, resilient business.
Here are five of the most common hurdles small businesses face, backed by data and expert insight:
1. Access to Capital Remains a Major Barrier
Securing funding is often the first and most persistent challenge. In recent surveys, many small businesses received none or only some of the financing they applied for—with minority- and women-owned businesses facing higher rates of denial or unfavorable terms.
Why it matters: Limited access to capital restricts a business’s ability to grow, manage cash flow, or invest in inventory, staffing, or technology. Even profitable companies can struggle if cash isn’t available when they need it.
2. Cash Flow Management Is a Common Pitfall
Many businesses close not because they’re unprofitable, but because they run out of cash in the short-term. Studies show that a significant majority of small business failures are due to poor cash flow management or a lack of understanding around cash flow
Why it matters: Even a slight delay in customer payments or unexpected expenses can destabilize your operations. Creating detailed forecasts, maintaining emergency reserves, and using short-term financing tools (like lines of credit) can help.
3. Hiring and Retaining Talent Is Harder Than Ever
Small businesses often struggle to compete with larger companies on salaries, benefits, and perks. Recent data shows many small businesses report job openings they cannot fill and a shortage of qualified applicants.
Why it matters: Without the right team, productivity, service quality, and growth potential can suffer. Creative compensation, a strong workplace culture, and upskilling opportunities can give small businesses an edge. Joining professional social media groups and networking at industry events can also help in making your business more than just another faceless job ad.
4. Regulatory and Tax Complexity Eats Up Time
Small businesses spend dozens of hours annually just on federal tax compliance—not to mention state and local regulations.
Why it matters: The more time business owners spend on paperwork, the less time they can invest in strategy, customer relationships, and innovation. Having a trusted accountant, automating key functions, and having a trusted network you can get feedback from can reduce the burden.
5. Technology and Cybersecurity Gaps Can Create Risk
Small businesses are often prime targets for cyberattacks but are typically underprepared. A significant share of all cyberattacks target small businesses, many of which lack the resources or awareness to defend themselves effectively.
Why it matters: A single data breach or system failure can lead to financial loss, reputational damage, or even closure. Simple steps—like using cloud-based software, enabling multi-factor authentication, and training employees using freely available material—can go a long way.
How Erie Ohio Capital Helps
We understand the pressures you’re under because we specialize in serving small businesses. Our financing solutions, advisory support, and tools are designed to help you:
- Secure working capital
- Improve cash flow visibility
- Weather seasonal revenue cycles
- Invest in talent and technology
- Stay compliant and financially agile
Whether you’re launching a startup or scaling up an existing business, you don’t have to go it alone. Let’s build a roadmap that works—for your business, your budget, and your future.
Conclusion
Starting a business is an incredible achievement—but sustaining one takes planning, adaptability, and the right technical, logistics, and financial support. By recognizing these common challenges early, you can build a strategy to navigate them with confidence.
If you’re ready to talk through your goals, we’re ready to listen.