8 Small Business Challenges
Running a small business today takes a lot of determination, stamina and problem solving skills by the owner if they want to even attempt to run a business. If they intend for it to prosper and grow, they will still be faced with many waves of challenges that may knock them off their feet from time to time. A small business owner will need to be aware of, understand and will probably have to address each challenge at some point in their business. Let’s look at eight challenges that may need to be addressed.
- The Owner Themselves
An entrepreneur is a special class of person that has something that is driving them to start a business in the first place. It could be a passion or they may have something to prove, whatever their reasons for starting the business, chances are they will be lacking in certain knowledge and skills. They may excel in some areas and they may be able to work 22 hours a day to make up for a lack of some knowledge, but at some point time, their fatigue and uncertainty, while trying to do it all alone may get the best of them. A business that is largely dependent on the owner can only grow to the point of that owner’s ability, willingness and time spent on getting things done.
- Lack of Direction, Strategy and Planning
An ability to solve most problems as they come up is another of the entrepreneur’s talents but solving day-to-day problems will only get a business so far. Time has to be spent by the owner working on the business thinking through possible strategies, coming up with plans and providing direction or vision for the employees. This planning action, besides being necessary for the business and its growth, helps provide the employees a path to follow and see how they might fit in with the company’s long range future. It also may help the owner rest a little easier at night.
- Technological Innovation and Information Overload
A small business owner and their team usually are spread pretty thin and wear many hats. Usually, someone within the company is dealing with someone outside the company to make all the technology work correctly. Needed improvements or upgrading to a more innovative technology is usually shunned because of the lack of skills or disruption it would cause within the company. This along with not fully using all the available data being generated within your company to aid in making key decisions puts the small business owner at a huge risk when savvy new competitors enter your market.
- Regulation and Risk Management
Many small business owners may not deal with heavy regulation or have large product liability risks to manage so they may not worry so much about this wave. But the ocean of business is large and waves are always being created. The new healthcare mandates may certainly change the need for small business to spend more time focusing in this area to stay in line with regulations as new law is finalized and takes effect.
- Gaining Customers and Their Loyalty
Gaining and keeping loyal customers has always been the name of the game for most small businesses. In fact, sometimes you have a customer before you have a business. But once you are in business a marketing plan needs to be created, even if on a very small scale. The process you go through to develop a marketing plan helps you look at and understand your customers. What do they purchase? What are the average sales; total annual sales? Is one or two of your customers generating a large share of your revenue; your profits? What type of leverage or risk might they place on you? What other products can be sold: at what margins? These are all questions the small business owner needs to be asking to survive and grow.
- Cash and Resource Management
How your cash is generated in your business is a must for each owner to fully understand. Where is the cash being tied up? If in inventory, how can it be converted quickly into cash? If it’s tied up in receivables, how can it be collected? What type of lending arrangements do you have with your bank? Most lending to small business has been seen by many bankers as more risky over the past years and is not likely to improve. What else in your company has value if sold or can generate new revenue?
- Hiring and Training The Right People
A small business work environment or culture is made up from the main body of its employees. A small business owner needs to attract, hire, train and keep motivated its core group of employees. If one leaves or is not satisfied in the company, it can cause quite a problem. These are the people that help you attain the lifestyle you are looking for by being a small business owner; a lifestyle that can be had from owning a successful small business. Find out if you core group is happy, if they are not, make them happy or make a change.
- The Right Level of Quality For Growth
Each small business owner should determine what they want their business to be and if they are working through a strategic plan, they should be able to see what the size potential is for their specific business. They should also understand what level of quality their product needs to be to satisfy their customers. If the quality is too low, but adequately priced, you may lose customers who want a higher quality product. If the quality is higher than what your customers are looking for and competitively priced, you may be losing margin. In either scenario, you should always understand what your quality strategy is, your future growth and profit depend on it.
There are many opportunities for different small businesses in America today. If an entrepreneur uses their talents, skills, abilities and resources effectively, they can prosper and become one of those that can live a lifestyle only dreamed about by most. That lifestyle is given to those that run a successful small business.
Gary J Kiecker