From carrying out day-to-day operations to facing the heat from industry heavyweights, small businesses have to face numerous challenges. As any business embarks on its journey of success, new challenges and obstacles are bound to get in its way. As the business grows, different challenges demand different solutions–what worked in the past might not be as effective and plausible now.
If you are driven by big entrepreneurial dreams, identifying and addressing common challenges associated with your small business is extremely essential for you to grow and thrive. To start, you need to respond to these challenges rather than reacting to them. Reacting to a particular problem could give you a semblance of short achievement, but responding to it with a rational mindset will give you a strategic, long-term advantage.
So, instead of treating your problems and challenges as a threat, you should welcome them and face them with vigor. This is the stage that gives wings to your aspirations, and hence is essential for establishing a successful business entity.
Here are the most common but key challenges for your small business:
1. Cash Flow And Financial Management
Cash flow problems are one of the most common reasons why small businesses lose steam early and go bust. As an owner, you have to spend money to earn money. So, during the initial stage, cash flow management can quickly get out of control and leave you high and dry. Making the pragmatic use of your finances, therefore, could be a key element in business planning and assessing new opportunities. You need to carefully control every component of your working capital in order to maximize your free cash flow.
Effective credit management and management of overdue debts are extremely crucial at this juncture. Management of cash flow and finances can also be streamlined by bring in technology. Some technology options are: Automated Clearing House (ACH), quick deposit (most banks offer this via a mobile app), dashboards, electronic check services, single-use accounts, and so on.
2. Planning and Execution
A successful roadmap for budding small businesses involves a perfect mix of a good strategy and a dedicated team who know how to execute the plan. Having a cool business idea is a great thing, but executing it requires even more energy and expertise. Therefore, you need to have a regular “execution” meeting and less regular “strategy” meetings.
In larger organizations, planning, strategy, and execution have separate departments. However, startups don’t usually have this luxury, so finding the right balance is important.
Business planning is highly critical to begin with. It lays down vision, mission, and objectives in order to make decisions wisely. Business always comes with risk. If you make plans for some business risk, you’ll be prepares to manage your business in case of such risk. Thus, during the execution part, it’ll be easier for you to factor in all the metrics and perform the tasks accordingly.
3. Right systems
Going the entrepreneurial way is full of risks and rewards, so having the right systems and tools in place can help you effectively and efficiently run your business. Here are a few systems your startup will need to fulfill its potential:
Accounting and bookkeeping: Money is at the heart of your business, which is why accounting and bookkeeping should be the core system to incorporate. Good accounting software will keep track of your sales and revenues. It is also important because you are too busy running your business to spend hours dealing with accounting every day.
** Payroll: **The payroll system is not only responsible for employees' salary compensation, but it also plays a vital role in protecting the company's reputation by ensuring compliance with various legislations. A good payroll system effectively manages self-employment taxes, which can be expensive if you don’t take care of them.
Invoices: Invoices are an important step before you get paid, so a poor invoices system could mean not getting paid for services performed. You have many options for your invoices including some systems built into your payroll and bookkeeping. The invoices tools should be simple and efficient.
Security: Your business data is very important and needs to be protected at any cost. Cybersecurity is one of the biggest concerns today, as events of damages from cyber crimes are rising sharply. Therefore you need to put systems in place that secure your organizational data, as well as personal customer data. As you scale, you will want to invest in testing your security against penetration, to make sure it cannot be foiled by any means.
4. Hiring The Right Team
While running your small business, it can be challenging to pick the right employees who meet your requirements. Lacking a keen eye to spot right skills and talent, you might end up hiring the wrong candidates, which could directly affect your bottom line. Hiring the right people for your business might be a painstaking process, but it’s rewarding one.
To get a head start and a prominent edge over others, it is important to build a dedicated team who can align their personal goals to the business’s goals. You need to make sure they not only have right skills but also fit into your culture.
Another way to approach hiring better candidates is acknowledge your own weaknesses, then seek out people who can match your weaknesses with their strengths.
Competition is inevitable for any startup or small business. You may be on your way to make a waves in the vast ocean of business world, but you’ll need to be on your toes.
However, you should let your competition unnerve you. Let it push you to be innovative, focused and to persevere. Your rivals may make it difficult to get more customers and get more sales, so be sure you understand your own strengths and build on them.
Additionally, focusing on your brand and your consumers is your top priority, but knowing what your rivals are doing will help you plot your next steps.
Owning a small businesses comes with certain risks and challenges. But, by getting the basics right, accepting the challenges head-on, and establishing a quality strategy and plan, you can breathe new life in their entrepreneurial journey.
Smith Willas is a freelance writer, blogger, and digital media journalist. He has a management degree in Supply Chain & Operations Management and Marketing and boasts a wide-ranging background in digital media. You can follow him on Twitter.