Challenges for Montana Businesses
It’s always a challenge to dust off my crystal ball each January and take a shot at predicting the future of our local economy.
No question that 2014 was an up and down year. Unemployment, stock market roller coaster ride, gold stagnant and gas prices diving down under $2.00/gallon.
But when it comes to local business that’s just the tip of the iceberg. Here are some reasons your new or existing business might have a tough time in 2015.
Misjudging Your Market
Customers and competition: A customer base that’s too small or too many competitors can spell doom for many startups. A bikini shop might have a tough time surviving our winters unless they locate next to a hot tub dealer. Make sure the current customer base or number of competitors won’t derail your dreams.
Outdated Business Plan
You created a business plan when you opened your business and it’s been languishing in an office file ever since. The economy is changing and your plan should be changing too. Healthcare, minimum wage, payroll costs, price of oil, new regulations, and taxes will all need to be considered in the coming year.
Misjudging Your Finances
Small business startups, and existing businesses, often ask for loans that are too low to sustain the business until it reaches the break-even level. Startups should include at least a year of personal expenses in the loan if possible.
If you can’t qualify for a loan including those expenses it may be time to rethink your business venture. If the business should fold you are still on the hook for the loan. Even an SBA guaranteed loan will require a personal guarantee at most banks.
Location, Location, Location
A good business may not be able to survive a bad location. And it’s not only your physical location that should concern you. What’s your location on Facebook, Twitter and LinkedIn? Are your ads appearing where your target market will see or hear them?
Do this one wrong and your business will be dead quickly. Make sure you are giving credit to creditworthy customers. I know it sounds crazy to kick your best customer to the curb if they are constantly late in paying you but that might be the best course of action. Prompt payment is good business. Customers must understand from the beginning that there will be consequences for slow payments.
Some Final Thoughts
Your worst business day was probably your first day, your worst week your first week, and your worst year was probably your first year. But you got through it.
You need to put yourself back into that “survive at all costs” mindset in the coming year. Just because things are getting a little better economically is no excuse to get complacent.
What will you do if gas prices increase, stock market goes down, or healthcare and other benefits become unaffordable? What were the positives from last year that you can build on? What weaknesses can be reduced or eliminated? What upcoming opportunities can you take advantage of? 2015 could be your best year ever if you just remember the Boy Scout motto..... — Be Prepared.