How Small Businesses Tackle Financial Challenges
Small businesses face numerous financial hurdles in today’s competitive market. This article explores practical strategies for overcoming these challenges, drawing on valuable insights from industry experts. From strategic resource allocation to efficient cost management, discover key approaches that can help small businesses thrive financially.
- Allocate Resources Strategically During Scaling
- Balance Growth with Sustainable Unit Economics
- Prioritize Long-Term Savings Amid Rising Costs
- Plan Ahead for Multiple Large Expenses
- Manage AI Technology Scaling Costs Efficiently
- Diversify Revenue Streams During Slow Seasons
- Implement 48-Hour Rule for Impulse Purchases
- Tackle Student Loan Debt Strategically
Allocate Resources Strategically During Scaling
One financial challenge we’ve recently been navigating at Spectup is resource allocation during periods of scaling. As we’ve expanded our services, the demand for tailoring our offerings–especially commercial due diligence–has grown faster than anticipated, which is a good problem to have but tricky from a budgeting perspective. I remember a similar situation at N26, when we’d launch a new feature and underestimate the cost of scaling the infrastructure to support it. At Spectup, the challenge lies in ensuring we invest enough in hiring and training top-tier consultants without stretching our margins too thin.
To approach this, we’ve implemented a rolling financial model that evaluates projected revenue against the incremental costs of expanding specific services. One of our team members proposed an interesting system where we track the ROI of every service line quarterly. For example, our pitch deck-focused clients often serve as a pipeline into larger growth services, which are more profitable over time. This insight allows us to prioritize allocations where we see longer-term value. Another strategy has been building strategic partnerships with software solutions–we’re aiming to reduce manual processes and lower long-term overhead. It’s not perfect yet, but we’re making decisions with a laser focus on sustainability rather than growth for growth’s sake. And frankly, having constant feedback from clients pushing us to refine makes this journey a lot less daunting.
Niclas Schlopsna
Managing Consultant and CEO, spectup
Balance Growth with Sustainable Unit Economics
Like many scaling tech companies in the fulfillment space, our biggest financial challenge right now is balancing aggressive growth with sustainable unit economics. We’re in a capital-intensive phase where we’re heavily investing in our technology platform while simultaneously expanding our network of 3PL partners.
When I founded Fulfill.com, I learned firsthand that technology development is expensive but essential. We’re currently allocating about 80% of our funding toward product development and engineering talent because we believe it’s critical to creating a seamless experience for both eCommerce brands and 3PLs.
This reminds me of my early days operating ShipDaddy, when I made the costly mistake of leasing a warehouse with poor highway access and insufficient receiving capabilities. That expensive lesson taught me the importance of strategic capital allocation.
Our approach to this challenge is threefold: First, we’re being incredibly disciplined about which technology investments we prioritize, focusing on features that directly impact matching accuracy and user experience. Second, we’re optimizing our referral fee structure with 3PL partners to ensure sustainable revenue while remaining free for eCommerce brands. And third, we’re selectively pursuing strategic partnerships that allow us to expand our offerings without the full financial burden of building everything in-house.
The 3PL industry is facing its own margin pressures right now, which creates both challenges and opportunities for our business model. By helping warehouse providers efficiently find ideal clients that match their capabilities, we’re providing real value that justifies our fees while reducing customer acquisition costs for our partners. It’s this balanced value exchange that will ultimately ensure our long-term financial stability.
Joe Spisak
CEO, Fulfill.com
Prioritize Long-Term Savings Amid Rising Costs
One common financial challenge many people face right now–including myself in a professional sense–is managing rising everyday expenses while still trying to prioritize long-term savings goals. Inflation has driven up the cost of essentials like groceries, utilities, and insurance, making it harder to consistently contribute to emergency savings or retirement accounts without feeling stretched.
The way I’m approaching this is by reassessing my monthly cash flow. I’ve started using a zero-based budgeting approach, where every dollar is assigned a specific job–whether it’s covering bills, funding an account, or being saved for an upcoming expense. I’ve also automated small, regular transfers into high-yield savings, so I’m still making progress even if the amounts aren’t huge. On top of that, I’m revisiting all recurring expenses–canceling subscriptions I no longer use and negotiating bills like internet and insurance.
It’s not about dramatic lifestyle changes–it’s about becoming more intentional with how each dollar is spent or saved, and accepting that progress in today’s economy might look a little slower, but it’s still worth pursuing.
Rose Jimenez
Chief Finance Officer, Culture.org
Plan Ahead for Multiple Large Expenses
One financial challenge I’m currently facing is planning for multiple large expenses at once–specifically, saving for a family vacation, covering seasonal home maintenance costs, and preparing for back-to-school spending–all within a tight 3-4 month window. When several non-negotiable costs overlap, it can feel overwhelming and easy to resort to using credit just to keep up.
To manage it, I’ve created separate sinking funds for each goal and automated small weekly contributions toward them. It’s a more manageable way to stay organized and avoid having to make tough trade-offs later. I also went through our monthly expenses and identified areas to temporarily scale back–like pausing takeout, rotating streaming services instead of keeping them all, and using loyalty points or cashback for essential purchases.
Wes Lewins
Chief Financial Officer, Networth
Manage AI Technology Scaling Costs Efficiently
One financial challenge we’ve been tackling at Caimera is managing the high costs of scaling our AI technology. As demand for our hyper-realistic fashion images grew, so did the need for more powerful servers and advanced machine learning models. Last year, we faced a situation where these costs started eating into our profit margins, especially during periods of low cash flow. To address this, we implemented a more efficient cost-sharing model with our clients, where we structured payment plans based on milestones tied to project deliverables. This approach allowed us to balance out expenses while keeping projects moving forward. As a result, we were able to reduce operational costs by 31% and improve cash flow stability by 23%. This shift in how we managed payment terms helped us weather the growing pains and continue to invest in innovation without compromising financial health.
Kirti Poonia
Founder, Caimera
Diversify Revenue Streams During Slow Seasons
One financial challenge NYC Meal Prep is currently facing is managing cash flow during slower seasons. Since our business is based on providing personalized meal prep services, demand can fluctuate depending on the time of year, with certain months seeing fewer clients.
To address this, we’re focusing on diversifying our revenue streams. We’re offering new packages and subscriptions for clients who want recurring meal services, which provides more predictable income. Additionally, we’re working on building long-term partnerships with local businesses and wellness programs, which can help us maintain a more consistent flow of business.
On the expense side, we’re also closely monitoring costs and looking for opportunities to reduce waste without sacrificing the quality of the meals we prepare. We’re making more use of bulk purchasing for frequently used ingredients and fine-tuning our scheduling to optimize labor costs during slower periods.
By balancing both revenue-generating strategies and cost-cutting measures, we’re confident that we can navigate these seasonal fluctuations and ensure the long-term financial health of NYC Meal Prep.
Keagan Stapley
Owner, NYC Meal Prep
Implement 48-Hour Rule for Impulse Purchases
I ended up getting things just to feel good, like random gadgets (AirPods), pricey shoes, and kitchen tools I never used. Before I knew it, I was throwing away hundreds each month. I felt like I was not thinking properly when I overspent. I decided to follow a simple rule: see if it’s something I really need, something worth spending on, or just a quick want. If I get an idea to do something randomly, I hold off for 48 hours before going for it.
One night, I almost bought a $300 espresso machine after a super stressful call. I took a little time off, stepped away, and after two days, the feeling was gone. That short break kept me from spending cash. This small change has made it easier for me to think clearly and spend smartly. My personal discipline shapes how I lead. We deserve everything we buy due to our hard work. However, it’s better to think twice before purchasing something.
Spencer Romenco
Chief Growth Strategist, Growth Spurt
Tackle Student Loan Debt Strategically
One financial challenge many face is managing student loan debt. With the rising cost of higher education, countless graduates find themselves saddled with substantial loan payments upon entering the workforce. A strategic approach is crucial. Prioritizing high-interest loans for quicker repayment can save thousands in interest over time. Exploring income-driven repayment plans or loan forgiveness programs can also provide relief. Ultimately, creating a realistic budget and sticking to it is key to chipping away at this financial burden systematically.
Huma Shaikh
SEO Consultant, Mitt Arv
