5 Biggest Problems Faced By Small Businesses And How To Overcome Them
Startups are known to have specific needs that bigger companies won’t understand. Those needs inevitably become challenges to business owners. Problems such as inexperience, business size, and the lack of resources can get in the way of an entrepreneur’s success.
If you are going through any of those problems, here’s a good news. Below are some of the biggest problems faced by small businesses and what you can do to overcome them.
They say that cash is king and this rings true especially for small businesses. Every startup needs money in order to operate.
For one, you’ll keep on paying bills even if you don’t make a sale. Also, as a business owner, you may have to skip taking a salary in the first few years. You may even have to pour your entire life savings to your firm just to keep it up and running. Because of these cash flow issues, a lot of starting businesses are forced to close even before they get the chance to rise above the competition.
So, how do you address such matters?
Well, it starts with managing your finances.
Sure, you’re going to spend money on bills, manpower, and inventory whether you like it or not, but you need to resist the urge to spend on items that can be bought or paid for at a much later time. Keeping a part of your money for the “rainy days” can help you avoid having to borrow money from financial institutions for when this season comes. In other words, don’t drain yourself dry.
Another good way to extend your cash flow is to negotiate with suppliers or vendors. If you can form a good relationship with them, you’ll probably get discounts or better deals when it comes to subscriptions or items in your inventory. Even the smallest savings can help with your finances, so don’t take this opportunity for granted.
You can find additional revenue streams to complement low-income months. For example, if you own a small restaurant that caters to tourists in a ski resort, you might want to consider offering catering services during the off-season. Or, if you own a small shop and you’re focused on selling Christmas decorations, you might want to expand to home decors little by little.
While recent technology has improved business communications in many ways, some issues regarding communications remain unsolved. These problems often have a major impact on how a small business performs and they usually affect key stakeholders. This includes employees, clients, and third-party vendors.
Here are some of the most common communication hurdles small businesses face and the suggested actions to help alleviate or overcome each issue:
• The lack of communication with stakeholders. Whether it’s for setting company goals, implementing new policies or even order tracking, it’s important to keep whoever’s involved in a project or a transaction on the loop all the time. You’ll need to communicate the progress or delays in every undertaking because small issues can oftentimes get blown out of proportion.
• Missing important calls or messages. Customers these days often frown at missed calls or voice messages as those can lead to missed business. As a business owner, you must always have access to every communication channel available. Take advantage of tools like call forwarding, business SMS, voicemail to email, and the like so that you’ll never miss out on any opportunity. Those tools can also help you respond to pretty much anyone in a timely manner.
• Disconnected employees. Most modern small businesses thrive in a virtual environment. They have field workers, remote employees, and office-based personnel. Such arrangements can result in a communication nightmare that would often snowball into limited productivity. Thus, a decision maker needs to cultivate a collaborative virtual space that will keep everyone connected.
For geographical constraints, you can make video conferencing a standard practice. For team communication, there are tools that allow chats with task management and collaborative office productivity components. The possibilities are endless; you only have to know where to look.
In the annual State of Small Business Report by Wasp Barcode, it states that 50% of small businesses say hiring new employees remains a top challenge in 2017. Considering this statistic, it’s quite apparent that hiring people can be taxing or overwhelming for business owners.
Below are specific issues surrounding hiring or manpower among startups:
• Unqualified applicants. Finding top talent can be challenging for small business owners who do not have the resources needed to hire personnel for specific positions. For such cases, recruiting people within your network can be your best bet. Find friends or contacts who can refer or vouch for potential employees; they probably know enough about your business that they’ve already done some sort of filtering regarding which person to recommend.
• Hiring for convenience. Because of the lack of time and money, some businesses fall into the trap of making hiring decisions propelled by cost-effectiveness and time pressure. Positions that are molded to fit a candidate’s skill (and not the other way around) can be detrimental to your business in the long run. Make sure to focus on value when hiring people more than anything else.
• Intense competition. You might find yourself vying against bigger organizations when it comes to applications. Bigger companies have the advantage of hiring recruiters to find the best people. They would likely offer higher salaries and unlimited benefits for the right candidates.
However, there are also a bunch of talented people out there who would rather work for a less bureaucratic organization. They prefer jobs with more flexible policies and bigger room for growth. You need to highlight these advantages in order to look more appealing to your prospects.
Quality and growth
Another challenge that small businesses need to face head-on revolves around growth. When the time to expand comes, you have to ensure that the quality of the goods or services you offer remain the same. Scaling doesn’t automatically mean that you have to compromise your standards. Remember, quality is probably what attracted customers to your business in the first place.
As soon as you enter this phase, you need to establish and implement clear quality control models. For example, if you have a 10-person sales team that uses the same script on the phone, you may eventually have to record calls and measure call data once you grow into a team of 50. This is to ensure that this script still fits and that clients are getting the service they expect from you.
You need to be able to delegate people who can take the responsibility of ensuring product quality. Their roles should be well-defined. Aside from these, you need to make your team understand that you are currently undergoing a season of growth so that your employees will feel more accountable for the tasks they perform.
When you were starting, it all seemed fun. You’ve designed every process to go as smoothly as possible. But when the customers start complaining, when the deliveries start arriving late, and when the lawyers start calling, you may instantly notice how your stakeholders start to look like monsters clawing away at you.
And once you stop recognizing how your business serves a purpose, that’s where things start to go haywire. You’ll drain all your energy and fatigue will creep in.
Keeping yourself inspired to push through with your business can be ultimately challenging, particularly when you are facing a lot of hurdles. Some people choose to give up immediately while others succumb to running their firms like zombies.
You don’t have to.
As Leslie Barber writes in Entrepreneur, “before you do anything, remind yourself why you started your business”. You need to keep yourself inspired by ideas and you need to nurture your people. You need to figure out which aspect of your business needs your full attention and be ready to get down to work to make better products or services.
Understanding the major problems faced by small businesses can help you get a better grip on how to continue running your startup with minimal roadblocks and a greater chance of succeeding.
Klaris Chua is a digital content marketer who has written many pieces on startups and small business communications. She used to be a reporter for a business newspaper but the conventional path of a writer didn’t appeal to her. You can connect with her on Twitter.