In their formative years, small businesses come face-to-face with many different challenges and hurdles. Some of these are harder than others to overcome and they contribute to quite a grim statistic—80% of small businesses go under by the end of their fifth year.
While statistics like these mean that many small business owners face their first few years with trepidation, being able to weather common small business challenges and come out on top is key for survival (and totally doable!) Many of the most common problems and challenges are actually fixable if the right approach is taken.
5 Common Challenges for Small Businesses and How to Fix Them
Here are five challenges and problems that we commonly hear small business owners struggling with, along with some of our own advice about how they can be resolved.
1. Insufficient Capital and/or Cash Flow
Capital (or rather, a lack of it) is one of the biggest challenges that start-ups and small businesses face. All too often, businesses open their doors without enough capital, start-up costs eat through what’s there, and small business owners can find themselves in a tricky situation. Even with sufficient capital, however, there is another potential problem—a lack of cash flow which can be caused by a myriad of factors.
To prevent running into either (or both!) of these problems, you should always ensure that your business has enough contingency cash on hand to sustain the business. Two years is often quoted as the “right” amount, but any amount of contingency cash is better than nothing. As for cash flow, being realistic when projecting figures such as sales, and not cutting budgets too thin are the ideal ways to avoid not having enough.
2. Not Being Able to Find Customers
No business in the world sits around waiting for its customers to appear—neither should yours. Finding and securing engaged leads is something that the marketing teams at even the biggest and most successful companies are tasked with day in, day out. For small businesses that aren’t a household name, however, finding leads can be especially challenging, and converting those leads into sales even more so.
Finding leads and turning them into customers beings with knowing who your ideal customers actually are, and then targeting them through an effective digital marketing campaign. You can then monitor this campaign’s success using org charts and other tools to map out things like sales funnels for potential customers who have shown an interest in your product (e.g. by commenting on a Facebook post or subscribing to your email newsletter.) Org charts are ideal for this because they are easy to create, modify, and customize.
3. Too Many Overheads
Having too many overheads and not being able to keep up with them is a sure-fire way to set your business on a downward slope that can easily spiral out of control. After all, out of control overheads can easily burn a hole in your capital and cause long-term capital and cash flow problems or exacerbate those that already exist. Unfortunately for start-ups, excitable business owners and entrepreneurs are likely to bring this upon themselves by insisting on the swankiest of office space, high-level employee benefits, and unsustainable spending on equipment, just to name a few things, in order to try and attract the best talent.
The only way to manage this challenge is to take stock of everything that’s going out and make cuts where necessary. These cuts can be as drastic as downsizing to a smaller yet just as functional office space or as simple as making changes to a product’s packaging in response to customer feedback so that fewer materials are used.
4. Planning Failures
For some reason, today’s entrepreneurs and business owners like to take each day as it comes. While this is a good policy in some cases, it isn’t one that can be applied business-wide, and those that throw planning to the wind are often the ones facing the direst short- and long-term problems.
If you want to succeed, treat your business like your competitors treat theirs. Have a strategic plan in place with your vision, goals, market analysis, finances, and everything else that’s critical to its day-to-day that you included (or should have included) on your business plan. Some of these elements again can be planned out with the clever use of org charts and other business planning tools.
5. Staying ‘Current’
To ensure your business stays “relevant”, it is important to be on the same page as what’s currently trending. After all, your competitors are, and staying current is a big part of making sure you keep up with them or, even better, get ahead. We understand that innovation can be a frightening thing, however, it is vital to embrace an open, forward-thinking culture that does not resist change.
Staying current is not all that difficult, either. Set aside a little time each day or week so that you can keep up with the latest trends, read the news, blogs, Twitter, and any other resources relevant to your industry.