Starting, sustaining and growing a business is hard. There are many challenges. Among them are numerous types of financial challenges.
The infographic above is hopefully validation that your struggles are not yours alone. These are some of the results of a massive survey by the New York Federal Reserve Bank of businesses across the country.
The data is broken out by “really young” businesses (0-2 years old), “young” (under 5 years old) and “established” (more than 5 years old).
In this survey about 70% of all the young businesses said they faced financial challenges in the previous 12 months. So if you are struggling, you are very much not alone! Financial challenge could reasonably be called “normal” for very young businesses.
The Fed was particularly interested to see if the availability of credit was one of the financial challenges facing businesses. After all, they oversee banks and also want to help the economy grow. Not surprisingly the “very young” companies are most affected by the funding availability challenge. It is much more of a challenge than for established companies, but as you can see the problem does not entirely go away! When about 40% of older companies are still challenged to access capital for expansion, there may be something wrong systematically.
The challenge of operating expenses being too high is also pretty common. And, it doesn’t appear to change that dramatically over time. This is a heads up that you will likely need to pay close attention to expenses for as long as you are in business.
Interestingly about 25% of companies of all ages struggle with their debt payments. And, it doesn’t get better with time. This is a heads up that you need to pay close attention to how much debt you take on, at what terms, to make sure you don’t fall into that 25% that is struggling!
Inventory was the final category they asked about. It’s too bad they didn’t ask about equipment, or accounts receivable, or “other.” What creates your financial challenges?
The final question is also extremely revealing. An overwhelming majority of businesses put in additional personal funds to address financial challenges. Are you prepared to do that?